Problem 16-12 Leverage and the Cost of Capital (LO1) Hubbard's Pet Foods is financed 70% by common stock and 30\% by bonds. The expected return on the common stock is 11.8%, and the rate of interest on the bonds is 6.2%. Assume that the bonds are default-free and that there are no taxes. Now assume that Hubbard's issues more debt and uses the proceeds to retire equity. The new financing mix is 42% equity and 58% debt. Assume the debt is still default free. a. Given the initial capital structure, calculate the expected return on assets. (Do not round intermediate calculations. Enter your answer as a persent rounded to 1 decimal place.) b. Given the revised capital structure, calculate the expected rate of return on equity. (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)