Question 14 5.88 pts Luke and Leia Inc., has no retained earnings since it has always paid out all of its earnings as dividends. Luke and Leia Inc., expect to do the same payout in the future. Luke and Leia Inc., uses the CAPM to calculate its cost of equity, and its anticipated capital structure consists of debt, preferred stock, and common stock. Which of the following situations would REDUCE its WACC? O Expected inflation increases O The flotation costs associated with issuing new common stock increase. The market risk premium declines. . The flotation costs associated with issuing preferred stock increase. O The company's beta increases