Barry, the CFO of a glassware company, is having a conversation with his CEO about a new project for next year.

Barry has utilized the glassware company's WACC to evaluate the new capital budgeting project. However, for this new project, the CEO insists that since the firm only plans to use debt to fund the new project, it should use the after-tax cost of debt to evaluate it.

Based on the above information, choose the Correct statement from below

Group of answer choices

a Neither the CFO nor the CEO is correct. The use of debt may impact the ability of the glassware company's cost of equity in the future and therefore the cost of equity is the correct cost of capital to use to evaluate the new project.

b The CEO is correct. Since the firm plans to use only debt to fund this particular new project, it should use the after-tax cost of debt when evaluating the project.

c The CFO is correct. Even if the glassware company expects to finance the new project with just debt, it should still use the WACC when evaluating the project and not just the after-tax cost of debt.