Jersey Computer Company has estimated the costs of debt and equity capital (with bankruptcy and agency costs) for various proportions of debt in its capital structure:

Proportion of debt			After-Tax Cost of Debt (ki)			Cost of Equity (ke)
	0.00						12.0	%
	0.10			4.7	%		12.1
	0.20			4.9			12.5
	0.30			5.1			13.0
	0.40			5.5			13.9
	0.50			6.1			15.0
	0.60			7.5			17.0

Determine the firms optimal capital structure, assuming a marginal income tax rate (T) of 40 percent. The optimal capital structure is approximately -Select-0% debt and 100% equity10% debt and 90% equity20% debt and 80% equity30% debt and 70% equity40% debt and 60% equity50% debt and 50% equity60% debt and 40% equityItem 1 .

Suppose that the firms current capital structure consists of 30 percent debt (and 70% equity). How much higher is its weighted cost of capital than at the optimal capital structure? Round your answers to two decimal places. 30% debt and 70% equity: % Difference: %