Burnham Brothers Inc. has its target capital structure that consists of common stock, preferred stock, and debt. Which of the following events would REDUCE its WACC? 1) The flotation costs associated with issuing new common stock decrease. 2) The company's beta increases. 3) Expected inflation increases, but the market risk premium remains unchanged. 4) T. flotation costs associated with issuing preferred stock increase. 5) The market risk premium rises