The CFO of Will Industries plans to have the company

issue $$500$ million of new $10\%$ coupon bonds and use

the proceeds to buy back their undervalued stock.

Assume that the company, which does not pay any

dividends, takes this action, and that total assets,

operating income $($EBIT$),$ and its tax rate all remain

constant. Which of the following would occur?

The company's taxable income would rise

The compamy's risk would decrease

The company would have more common equity than before

The company would have to pay less in taxes