The amount by which bankruptcy costs increase a firm's WACC cannot be precisely quantified. Nevertheless, firms tend to take certain actions to optimize their capital structure by balancing the tax shield benefits of leverage against the financial distress costs. Which of the following scenarios is most likely to lead to a higher$-$than$-$optimal WACC for the firm?

Question $6$ options:

a$)$

Firms with relatively high investments in plant and equipment borrow more than firms with relatively low investments in plant and equipment.

b$)$

Firms in relatively high tax brackets borrow more than firms in relatively low tax brackets.

c$)$

Firms with relatively low business risk borrow more than firms with relatively high business risk.

d$)$

Firms with predominantly tangible assets borrow more than firms with predominantly intangible assets.