Question 8 [16 Marks] Washington Paper Company has estimated the costs of debt and equity capital (with bankruptcy and agency costs) for various proportions of debt in its capital structure as follows: Debt Ratio ([B/(B+E)] Pre-tax Cost of Debt (kd) Cost of Equity (ke) 0.00 14.0% 0.10 7.0% 14.2% 0.20 7.2% 14.6% 0.30 7.6% 15.4% 0.40 8.2% 17.0% 0.50 9.0% 20.0% 0.60 10.0% 26.0% The company's marginal (and average) income tax rate is 40% Required: Determine the company's optimal capital structure