Please help me with question 15

15 choose to have the same identical outcomes as investing in the common stock at the 100 percent common stock-financed firm? Encircle one numeral for the correct statement. a If with a substitution of debt for common stock the cost of both common stock and debt increases, then the WACC will 1 Increase. 2 Decrease. 3 Stay the same. 4 Increase, decrease, or stay the same. b If debt is substituted for common stock, one would logically expect the cost of stock equity to 1 Increase 2 Decrease. 227 3 Stay the same. 4 Increase, decrease, or stay the same. C In the absence of bankruptcy costs and corporate taxes, a firm with more debt than the market thinks is rational will sell. 1 At the same value as an identical firm properly financed (as viewed by the market). 2 At less than a firm properly financed. 3 At more than a firm properly financed. 4 The same value, or less than, or more than, depending on risk preferences. The earnings of firms X and Y are identically distributed (they are the same firm except for capital structure). Other facts are 16 Market values