A financial analyst is examining the capital structure decisions of four companies that use the pecking order hypotheses for decision making. Which company accurately implements the pecking order hypothesis?

Group of answer choices

A company that prefers new debt over internally generated funds to finance new projects.

A company that prefers internally generated funds over new debt to finance new projects.

A company that prefers new common stock over internally generated funds to finance new projects.

A company that prefers new common stock over the issue of new debt to finance new projects.