In Modigliani & Miller's assumed world with no taxes or other externalities, the WACC is independent of the financing mix because:

Group of answer choices

The WACC is not independent of the capital structure in Modigliani & Miller's theory

The return required by equity holders increases as low cost debt is added to the capital structure

The returns required by both equity and debtholders are constant, independent of the capital structure

The return required by bondholders increases incrementally each time new debt is added