Starbuck$$s current capital structure $($based on market value of the bond and stock outstanding$)$ is $70\%$ debt and $30\%$ equity. The common stock is reported to have a beta of $1\mathrm{.}50$ if you search on Google and the company$$s tax rate is $40\%.$ The President thinks the

company is too risk because it has too much debt, and he asks the VP of Finance to consider the impact of moving to a capital structure with $35\%$ debt and $65\%$ equity. The current risk$-$free rate is $4\mathrm{.}0\%$ and the market risk premium is $5\mathrm{.}0\%.$ By how much would

the firm$$s cost of equity change as a result of altering its capital structure? $($i$.$e$.,$ what$$s the cost of equity when the firm is at $70\%$ debt, what$$s the cost of equity will be when the firm is at $35\%$ debt, and so what is the difference$)$