See if you can tell if the following two statements are true or

false and why:

$"$So the firm can finance $50\%$ of the operations with debt at $8\%.$ Clearly

that's less than the cost of capital shareholders require, so it's optimal to

have more debt." What do you think and why?

"Clearly debt is less risky than equity, so it must be optimal to finance

projects with more debt." What do you think and why?