The CFO of Mulroney Brothers has suggested that the company should issue $$300$

million worth of common stock and use the proceeds to reduce some of the company$$s

outstanding debt. Assume that the company adopts this policy, and that total assets and

operating income $($EBIT$)$ remain the same. The company$$s tax rate will also remain the

same. Which of the following will occur:

a$.$ The company$$s net income will increase.

b$.$ The company$$s taxable income will fall.

c$.$ The company will pay less in taxes.

d$.$ All of the answers above are correct.

e$.$ Answers b and c are correct.