15. Currently, Hotel California has no debt (i.e., leverage=0). The CEO of Hotel California considers increasing leverage (=debt/(debt+equity)) 0.25. Currently, Hotel California's CAPM beta is 1.5. The cost of debt (Rp) will be 10%, riskfree rate (RF) is 2%, and market return (Rm) is 13.5%. Assume that the corporate tax rate (t) is 50%. Your task, as the CFO of Hotel California, is to provide the cost of capital under this proposed capital structure (i.e., 25% leverage). What is the weighted average cost of capital under the proposed capital structure (i.e., 25% leverage)? * Bonus Question: According to Modigliani-Miller's propositions (under the required assumption that the corporate tax rate (t) is 50%), what is the optimal level of leverage that maximize the Hotel California's value? (+1 point)