Assume a world with perfect capital markets with corporate taxes. Company X is initially all-equity financed with a market value of $20 million. Company X is considering a $5 million debt-equity swap. After the swap, the total value of the firm would _______ and the firm's weighted average cost of capital would _______.

Select one:

a. increase; decrease

b. decrease; increase

c. increase; remain unchanged

d. remain unchanged; remain unchanged

e. remain unchanged; decrease