Which of the following is NOT a reason the effective cost of debt is lower than the cost of equity? Debt holders don't have a say in how the company is run Debt holders have a legally enforceable contract with a explicit repayment schedule If the firm enters bankruptcy, the debt holders are more likely to recover (at least some of) their investment Interest on debt is tax deductible None of the Above QUESTION 4 Tin House BBQ uses only equity financing. The federal government recently announced a decrease in the corporate tax rate. What is the most likely impact on the company's weighted average cost of capital (WACC)? Decrease since taxes are bad Increase since the effective cost of debt will increase No change since the tax shield of debt only matters if the firm uses debt financing Not enough information to decide