At time of purchase, a property investment is funded 60% through interest-only debt and 40% through equity. Over time, as the value of property increases, which of the following can be appropriate to describe the impact upon property WACC ?

Select one:

a.

K_e, K_d and WACC remain unchanged

b.

Ke falls, Kd is unchanged and WACC falls

c.

K_e falls, K_d rises and WACC is unchanged

d.

Ke is unchanged, Kd falls and WACC falls

e.

Ke rises, Kd falls and WACC is unchanged