Aaron Athletics is trying to determine its optimal capital structure. In order to estimate the cost of debt, the company has produced the following table at three potential capital structures:

Percent financed with debt	Bond Rating	Before-tax cost of debt
0.30	A	8.0%
0.40	BB	8.8%
0.50	B	9.6%

The companys tax rate is 40 percent. The company uses the CAPM to estimate its cost of common equity. The risk free rate is 5 percent and the market risk premium is 6 percent. Aaron estimates that if it had no debt, its beta (unlevered) would be 1.0.

a. On the basis of this information, what is the companys optimal capital structure?

b. On the basis of this information, what is the firms WACC?