1 pts Question 5 In the cost of capital approach, you estimate the cost of equity and the cost of debt at each debt ratio, and the resulting cost of capital. As you increase the debt ratio, which of the following is most likely to happen? Cost of equity will go down but the cost of debt will go up Cost of equity and cost of debt will both increase Cost of equity will go up but the cost of debt will go down Cost of equity will go up and the cost of debt will remain unchanged Cost of equity and cost of debt will both decrease Question 6 1 pts The objective in corporate finance is to maximize the value of the business. In the standard cost of capital approach to financing, we argue that the optimal debt ratio is the one that minimizes the cost of capital. For this approach to yield the optimal, which of the following assumptions do you need to make? "The net income for the firm will not change as the debt ratio changes" The bond rating of the firm will not change as the debt ratio changes "The operating income of the firm will not change as the debt ratio changes" The beta will not change as the debt ratio changes 00