Suppose that a group of senators propose an elimination of the tax deductibility of corporate interest expenses. All firms in the economy are exposed to the risk of costly bankruptcy. Assume that the proposed policy would not change firm earnings before interest and taxes (EBIT). You want to compare the aftermath of the proposed policy's implementation with the current state of a levered firm. Which one of the following will be correct for this firm after the firm restructures its capital responding to the proposed policy? O A. Cost of equity will increase. O B. Firm equity will become riskier. OC. Optimal leverage will increase. D. Return on equity will become more volatile. E. Firm value will decrease