One of your new employees notes that your debt has a lower cost of c equity $(13\%).$ So$,$ he suggests that the firm swap its capital structure from $28\%$ debt and $72\%$ equity to $72\%$ debt and $28\%$ equity instead. He estimates that after the swap, your cost of equity would be $21\%.$

a$.$ What would be your new cost of debt? Make your calculations based o WACC.

b$.$ Have you lowered your overall cost of capital?

a$.$ The new cost of debt is $\%.($Round to two decimal places.$)$

b$.$ Have you lowered your overall cost of capital? $($Select the best answer below.$)$

A$.$ No$,$ because your overall cost of capital $($WACC$)$ is not determined by the risk of your

assets.

B$.$ Yes, because your overall cost of capital $($WACC$)$ is determined by the risk of your

assets.

C$.$ No$,$ because your overall cost of capital $($WACC$)$ is determined by the risk of your

assets.

D$.$ Yes, because your overall cost of capital $($WACC$)$ is not determined by the risk of

your assets.