$2.$ Morris Industries has a capital structure of $55$ percent common stock, $10$ percent preferred stock, and $45$ percent debt. The firm has a beta of $0\mathrm{.}89$ and a tax rate of $38$ percent. Given this, which one of the following statements is correct?

A$.$ The aftertax cost of debt will be greater than the current yield$-$to$-$maturity on the firm's bonds.

B$.$ The firm's cost of preferred stock is greater than the firm$$s cost of equity.

C$.$ The firm's cost of equity is unaffected by its capital structure.

D$.$ The company$$s systematic risk is lower than the market$$s systematic risk.

E$.$ The firm's weighted average cost of capital will remain constant as long as the capital structure remains constant$\mathrm{.}2.$ Morris Industries has a capital structure of $55$ percent common stock, $10$ percent preferred stock, and $45$ percent debt. The firm has a beta of $0\mathrm{.}89$ and a tax rate of $38$ percent. Given this, which one of the following statements is correct?

A$.$ The aftertax cost of debt will be greater than the current yield$-$to$-$maturity on the firm's bonds.

B$.$ The firm's cost of preferred stock is greater than the firm$$s cost of equity.

C$.$ The firm's cost of equity is unaffected by its capital structure.

D$.$ The company$$s systematic risk is lower than the market$$s systematic risk.

E$.$ The firm's weighted average cost of capital will remain constant as long as the capital structure remains constant.