Complete the blank

Proportion of Debt             Cost

Equity     Cost of debt               Cost of Capital             B L

0.0                                12.0%             0

                     0.10                   12.1%             4.7%

                     0.20                   12.5%               4.9%

                     0.30                   13.0%               5.1%

                     0.40                   13.9%              5.5%                          

                     0.50                   15.0%              6.1%

                     0.60                    17.0%              7.5%

Which is the optimal capital structure and why?

If the unleveraged beta of this company is 1.12, calculate the leveraged beta for each capital structure and explain why the betas behave like this.