3] Cost of debt with changes in the debt ratio (35 points) Your task is to calculate the pre-tax cost of debt for Company D at different levels of the debt ratio (D/D+E), ranging from 0% to 90%. You will start from a scenario where the firm is unlevered (D0); from there the debt ratio increases. Keep total capital (D+E 5395,00 nchnged t keep EBIT unchanged at $28,200. As the debt ratio increases, interest payments increase and the interest coverage ratio diminishes. This affects the credit rating of the company, and therefore the credit spread and the cost of debt. You have to pay special attention to the credit ratings as lower interest coverage ratios lead to credit downgrades- and you have to re-calculate the interest expense and the credit ratio and the credit spread