MC. 15.062 Question 3 of 50 Laramie Trucking's CEO is considering a change to the company's capital structure, which currently consists of 25% debt and 75% equity. The CFO believes the firm should use more debt, but the CEO is reluctant to increase the debt ratio. The risk-free rate, IRF, is 5.0%, the market risk premium, RPM, is 6.0%, and the firm's tax rate is 25%. Currently, the cost of equity, Is, is 11.5% as determined by the CAPM. What would be the estimated cost of equity if the firm used 60% debt? (Hint: You must first find the current beta and then the unlevered beta to solve the problem.) a. 12.50% O b. 13.58% C 16.05% d. 14.77% O e. 11.50%