Ignore financial distress costs. When $(1$ TC$)\backslash$times $(1$ TS$)=(1$ TB$),$ then firms:

Multiple Choice

should be all$-$equity financed.

need to maintain a debt$-$equity ratio of $\mathrm{.}5.$

tend to be indifferent between issuing debt or issuing equity.

discover that both dividends and interest payments are non$-$deductible business expenses.

can reduce their taxes by increasing their dividend payouts.