A company has an original capital structure of; $20,000 in Total Debt and $30,000 in

Equity therefore, its Total Assets are $50,000. The Cost of Total Debt is 10.0% and

Equity is 15.0%. It wants to know if it should increase its Total Debt to $30,000 while

maintaining the same amount in Total Assets. The new cost of Debt is the same as

the original cost, and corporate taxes are at 35.0%. Find the new Cost of Capital for

the company's new Capital Structure (WACC).

11.05%

13.08%

11.85%

13.80%