Which of the following statements is CORRECT?

Suppose a firm has less than its optimal amount of debt. Increasing

its use of debt to the point where it is at its optimal capital structure

will decrease the costs of both debt and equity financing.

A firm with high business risk is more likely to increase its use of

financial leverage than a firm with low business risk, assuming all

else equal.

If a firm's after$-$tax cost of equity exceeds its after$-$tax cost of debt, it

can always reduce its WACC by increasing its use of debt.

There is no reason to think that changes in the personal tax rate

would affect firms' capital structure decisions.

In general, a firm with low operating leverage also has a small

proportion of its total costs in the form of fixed costs.