When a firm adds bankruptcy to Modigliani and Millers world of capital structure, which of the following statements is true as the firm adds more debt to its financing mix?

A. Equity holders increase their rate of return

B. The advantage of the tax shield starts to be offset by financial distress costs.

C. The companys WACC starts to increase past a certain level of debt

D. Statements (a) through (c) are all correct.