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						8.0	%
	0.10			4.7	%		8.1
	0.20			5.4			8.7
	0.30			5.8			9.3
	0.40			6.4			9.8
	0.50			6.9			10.4
	0.60			7.1			11.8

Determine the firms optimal capital structure, assuming a marginal income tax rate (T) of 40 percent.

What is the WACC of the optimal capital structure? 10.12% should be entered as 10.12

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.10.12% should be entered as 10.12

Hint: you subtract the two WACCs.