Which of the following statements is CORRECT? Increasing a company's debt ratio will typically increase the marginal costs of both debt and equity financing. However, this action still may lower the company's WACC. Increasing a company's debt ratio will typically reduce the marginal costs of both debt and equity financing. However, this action still may raise the company's WACC. Since debt financing raises the firm's financial risk, increasing the target debt ratio will always increase the WACC. Since debt financing is cheaper than equity financing, raising a company's debt ratio will always reduce its WACC. Since a firm's beta coefficient is not affected by its use of financial leverage, leverage does not affect the cost of equity. Which of the following statements is CORRECT? The free cash flow valuation model, Vops = FCF1/(WACC - 8), can be used only for firms whose growth rates exceed their WACC. The free cash flow valuation model, Vops FCF1/(WACC - g), cannot be used for firms that have negative growth rates. If a company has two classes of common stock, Class A and Class B, the stocks may pay different dividends, but under all state charters the two classes must have the same voting rights. The preemptive right gives stockholders the right to approve or disapprove of a merger between their company and some other company The preemptive right is a provision in the corporate charter that gives common stockholders the right to purchase (on a pro rata basis) new issues of the firm's common stock