A US manufacturing company has reached an EBIT of USD 500 mil. and paid USD 170 mil. in taxes last year. The Debt/Total Capital ration has been 25% (debt in the form of corporate bonds). The company is targeting a constant D/Capital ratio in the future. US 30-year T-Bond's current rate of return is 3%, the average excess return of the US stock market over the last 50 years is 5%. The beta of assets for the firm is 1.1 while the beta of debt equals 1.3. Estimate the weighted average cost of capital for this company. Describe in words what would happen to the company's cash flow and cost of capital if the company decided to raise the level of debt to 50% by taking a bank loan.