According to the pecking order theory, MBG$\text{'}$s announced capital structure change:

A$.$ is optimal because debt is cheaper than equity on an after$-$tax basis.

B$.$ may be optimal if new debt is issued after new equity is made complete use of as a

source of capital.

C$.$ may be optimal if new debt is issued after internally generated funds are made

complete use of as a source of capital.