In a world where Modigliani and Miller's assumptions hold with taxes, Coke and Pepsi are in the exact same business, but Coke faces a higher debt-to-equity ratio. Which of the following is correct?

A. Coke will have a lower cost of capital

B. Pepsi will have a lower cost of capital C. They will have the same cost of capital

D. There is not enough information to answer this question