According to M&M Proposition II (No Taxes),

Select one:

a. WACC is not affected by an increase in leverage because the effect of an increase in leverage on the weighted cost of debt is offset by the increase in cost of equity.

b. WACC is not affected by an increase in leverage because the effect of an increase in leverage on the weighted cost of equity is offset by the increase in cost of debt.

c. WACC is not affected by an increase in leverage because investors are unable to do homemade leverage.