Foremann Software Co. wants to find its optimal capital structure. Its current capital structure is 45% debt and 55% equity, but the CFO hopes they can use more debt to achieve a lower cost of capital. Right now, the risk-free rate is 3%, the market risk premium is 6%, and the firm's tax rate is 25%. Using the CAPM, the company's cost of equity today is 11%. If the company changes its capital structure to 55% debt and 45% equity, what will its new cost of equity capital be using the CAPM model? 7.72% 8.85% 9.71% (D) 10.50% 12.50%