A firm issues debt and uses the funds to buy back equity. Assume that there are no costs of financial distress or transactions costs. Which of the following statements is least accurate?

Select one:

a.Debt will increase, so will the interest expense.

b.Share price will decrease.

c.Debt will increase, so will the tax shield from debt.

d.Profit before tax will decrease and total cash flows will increase.

e.Profit after tax will decrease.