Question: A firm with a 70% debt to equity ratio and a beta of 1.46 has determined that its cost of equity is too high. In order to lower the cost of equity by 1.05%, what would its debt to equity ratio have to be? Assumptions the risk-free rate is 5.25%; the risk premium is 6.75%; the tax rate is 34%; and the firm's unlevered beta is 1.00.