Suppose that the Australian government announces that dividend imputation will be abolished. How would your leverage assumption $($concerning capital structure composition$)$ for estimating the weighted average cost of capital change and why?

Group of answer choices

Leverage would decrease because there will be fewer tax benefits associated with debt finance.

Leverage would decrease because the equity value would rise.

Leverage would decrease because the cost of debt capital would rise.

Leverage would increase because the equity value would fall.