Solve question 2 and answer the question detailed I need ASAP please

liott Athletics is trying to determine its optimal capital structure, which now consists of only debt and common equ The firm does not currently use preferred stock in its capital structure, and it does not plan to do so in the future. treasury staff has consulted with investment bankers. On the basis of those discussions, the staff has created the followi table showing the firm's debt cost at different levels: Debt/Capital Equity/Capital Debt/Equity Bond B-T Cost of Ratio (wc)Ratio (D/E)Rating Debt 7.0% 8.0% 10.0% 12.0% 15.0% Ratio (wd) 0.00 0.0 0.2 0.4 0.6 1.0 0.8 0.6 0.4 0.2 0.25BBB 0.67 1.50 4.00 0.8 Elliott uses the CAPM to estimate its cost of common equity, and estimates that the risk-free rate is 5%, the market risk premium is 6%, and its tax rate is 40%. Elliott estimates that if it had no debt, its "unlevered" beta, would be 1.2. Please calculate the firm's weighted average cost of capital when the firm's debt/capital ratio is 0.4.(5 points) b. When you perform the same calculation in step (a) for various other levels of debt/capital ratio, you find that debt/capital ratio of 0.4 is associated with the lowest WACC, i.e. optimal capital structure for the given parameters. Now assume that tax rate is increased to 60% and you follow the same procedure and find that optimal capital structure changes to debt/capital ratio of 0.6. What does this mean? (2 points)