Which of the following is true regarding debt and equity financing?

The primary trade-off in capital structure decisions is tax savings and fixed financing costs of equity

Debt financing will dilute existing shareholders

A company with an A debt rating will have a higher cost of debt than a company with a B debt rating

Dividends paid to equity investors in a company are tax deductible

The goal of capital structure decisions is to minimize weighted average cost of capital (WACC)

Which of the following would result in a company having a LOWER weighted average cost of capital (WACC)?

Higher cost of equity

Lower profit margins

Lower tax rate

Lower interest rate on debt

Higher financial risk of a default on debt