Claxton Company is considering an adjustment to its capital structure. Presently, Claxtons management targets debt-to-equity ratio of 1.0. The marginal corporate tax rate is 20.0%, Claxtons debt sells to yield 8.0%, and Claxtons WACC is 12.0%.

Hoping to reduce its WACC, Claxtons management is considering selling additional stock and using the proceeds to pay down debt sufficient to bring the debt-to-firm-value ratio down to 30.0% and the yield on its debt down to 6.5%.

What effects on Claxtons WACC and required equity return should Claxtons management follow through with the capital structure change? You must present all supporting calculations.