A firm currently has zero debt in its capital structure and an overall cost of capital of 9%. The firm is considering a new capital structure with 40% debt-to-total assets. The interest rate on the debt would be 4%, and the entire proceeds from the debt issue would be used to reduce the firm's equity. Assuming a Modigliani & Miller environment with a corporate tax rate of 34%, what would this firm's (1) cost of equity capital and (II) overall cost of capital be under the proposed new capital structure? Show all workings, and explain the theory behind your calculations in a