$15.$ Encircle one numeral for the correct statement.

a$.$ If with a substitution of debt for common stock the cost of both common stock and debt increases, then the WACC will

$1.$ Increase.

$2.$ Decrease.

$3.$ Stay the same.

$4.$ Increase, decrease, or stay the same.

b$.$ If debt is substituted for common stock, one would logically expect the cost of stock equity to

$1.$ Increase.

$2.$ Decrease.

$3.$ Stay the same.

$4.$ Increase, decrease, or stay the same.

c$.$ In the absence of bankruptcy costs and corporate taxes, a firm with more debt than the market thinks is rational will sell.

$1.$ At the same value as an identical firm properly financed $($as viewed by the market$).$

$2.$ At less than a firm properly financed.

$3.$ At more than a firm properly financed.

$4.$ The same value, or less than, or more than, depending on risk preferences.Encircle one numeral for the correct statement.

a$.$ If with a substitution of debt for common stock the cost of both common stock and debt increases, then the WACC will

Increase.

Decrease.

Stay the same.

Increase, decrease, or stay the same.

b$.$ If debt is substituted for common stock, one would logically expect the cost of stock equity to

Increase.

Decrease.

Stay the same.

Increase, decrease, or stay the same.

c$.$ In the absence of bankruptcy costs and corporate taxes, a firm with more debt than the market thinks is rational will sell.

At the same value as an identical firm properly financed $($as viewed by the market$).$

At less than a firm properly financed.

At more than a firm properly financed.

The same value, or less than, or more than, depending on risk preferences.