QUESTION 4 ACCM Inc. is considering adding leverage to its capital structure. The firm's managers believe they can issue more debt to exploit the tax benefit of leverage However, they also recognize that higher debt increases the risk of financial distress. Based on simulation of the firm's future cash flows, the managers have made the following estimates (in millions of dollars) for different levels of debt (%) in the firm capital structure. Debt level 10% 20% 30% 40% 50% Pinterest tax shield) 1 2.5 3.75 4.5 5.25 PV[Financial distress cost) 0.5 2.25 3.1 6.25 1.25 The optimal capital structure (debt level of the firm is closest to: O A 40 8. 30% OC 20% OD. 50W