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True or false, explain 1. The cost of equity is generally much higher than the after-tax cost of debt. Therefore, increasing the debt ratio will

True or false, explain

1. The cost of equity is generally much higher than the after-tax cost of debt. Therefore, increasing the debt ratio will always lower the cost of capital

2. If dividend payments to stockholders are tax deductible to corporations, the optimal debt ratios of these firms will decrease.

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