James Sporting Goods is a small, publicly-traded company that has 10 million shares outstanding, trading at $ 2/share, and $ 80 million in debt (book and market) outstanding. The current (levered) beta for the company is 2.72 and the current pretax cost of debt is 9%. The riskfree rate is 3%, the equity risk premium is 6% and the marginal tax rate is 40%. What is the current cost of capital for the firm? O A. 8.18% B. 8.00% C. 8.38% D. 8.28% Reset Selection Question 27 of 30 3.33 Points James Sporting Goods is a small, publicly-traded company that has 10 million shares outstanding, trading at $ 2/share, and $ 80 million in debt (book and market) outstanding. The current (levered) beta for the company is 2.72 and the current pretax cost of debt is 9%. The riskfree rate is 3%, the equity risk premium is 6% and the marginal tax rate is 40%. Now assume that you believe reducing your debt to capital ratio to 30% is the right choice to make and that doing so will reduce your default spread by half. What is the cost of capital at a 30% debt ratio? A. 8.40% B. 7.40% C. 5.40% D. 6.40%