(This problem combines material from Chapters 21 and 22.) Thefinancial manager has determined the following schedules for the cost of funds: Cost of DebtRatio Cost ofDebt Equity 0% 5% 13% 10 5 13 20 5 13 30 5 13 40 5 14 50 6 15 60 8 16 a. Determine the firm's optimal capital structure. b. Construct a simple pro forma balance sheet that shows the firm'soptimal combination of debt and equity for its current level of assets. Assets $500 Debt Equity $500 c. An investment costs $400 and offers annual cash inflows of $133for five years. Should the firm make the investment? d. If the firm makes this additional investment, how should itsbalance sheet appear? Asset Debt Equity e. If the firm is operating with its optimal capital structure anda $400 asset yields 20.0 percent, what return will the stockholders earn on their investmentin the asset