10-8 Probable Effect on rd(1-T) WACC a. The corporate tax rate is lowered. b. The Federal Reserve tightens credit. C. The firm uses more debt; that is, it increases its debt/assets ratio. d. The dividend payout ratio is increased. e. The firm doubles the amount of capital it raises during the year. f. The firm expands into a risky new area. g. The firm merges with another firm whose earnings are counter-cyclical both to those of the first firm and to the stock market. h. The stock market falls drastically, and the firm's stock falls along with the rest. i. Investors become more risk averse. j. The firm is an electric utility with a large investment in nuclear plants. Several states propose a ban on nuclear power generation. 10-8 Probable Effect on rd(1-T) WACC a. The corporate tax rate is lowered. b. The Federal Reserve tightens credit. C. The firm uses more debt; that is, it increases its debt/assets ratio. d. The dividend payout ratio is increased. e. The firm doubles the amount of capital it raises during the year. f. The firm expands into a risky new area. g. The firm merges with another firm whose earnings are counter-cyclical both to those of the first firm and to the stock market. h. The stock market falls drastically, and the firm's stock falls along with the rest. i. Investors become more risk averse. j. The firm is an electric utility with a large investment in nuclear plants. Several states propose a ban on nuclear power generation