22. Stephens Electronics is considering a change in its target capital structure , which currently consists of 40% debt and 60% equity . The CFO believes the firm should use more debt , but the CEO is reluctant to increase the debt ratio . The risk- free rate , IRE , is 8. 0% , the market risk premium , RPM , is 11. 0% , and the firm's tax rate is 35% . Currently , the cost of equity , Is , is 15% as determined by the CAPM . What would be the estimated cost of equity if the firm used 70 % debt ? A. 29. 16%0 . 33. 25% 37.99 %/0 D. 30.35)