4. Sheeny & Sho Corp is studying various potential capital structures. The table below shows their cost of equity and cost of debt for different debt ratios. (As we'll see in later chapters, the costs of debt and equity can change as the capital structure does.) Assuming their tax rate is 40%, and that Sheeny & Sho wants to minimize its cost of capital, what capital structure should the firm choose? What will the weighted average cost of capital (WACC) be at that point? Cost of Debt Debt Ratio (% of capital structure that is debt) 0% 10% 20% 30% 40% 50% 60% Cost of Equity 14.0% 14.2% 14.6% 15.4% 17.0% 20.0% 26.0% 7.0% 7.2% 7.6% 8.2% 9.0% 10.0%