Red Bird Corporation is trying to determine an appropriate capital structure. It knows that, as its financial leverage increases, its cost of borrowing will eventually increase as will the required rate of return on its common stock. The company has made the following estimates for various financial leverage ratios with some missing numbers. B/S Ki B/(B+S) S/(B+S) levered beta 0.00 3.00% 18.00% 18.00% 0 1 2.00 0.11 3.00% 18.89% 17.30% 0.1 0.9 2.11 0.25 4.00% 20.00% 16.80% 0.2 0.8 2.25 0.43 4.00% 21.43% 16.20% 0.3 0.7 2.43 0.67 4.00% 23.33% 15.60% 0.4 0.6 2.67 1.00 4.50% (2) 0.5 0.5 1.50 4.50% (52 0.6 0.4 (6) 2.33 5.00% 36,67% 14.50% 0.7 0.3 4.33 4.00 6.00% 50.00% 14.80% 0.8 0.2 6.00 9.00 7.00% 90.00% 15.30% 0.9 0.1 11.00 (NOTE: Ki -after-tax cost of debt, Ke = cost of equity, Ko - cost of asset or WACC, Bis the market value of debt, and Sis the market value of equity) The expected return on the market portfolio is 10%, the risk free rate is 2%, tax rate is 50%. Assume CAPM is the right model to calculate the required rate of return on its common stock. (1) Fill in the blanks. (Opts) (2) Find the optimal capital structure. (3pts)