Which of the following statements is FALSE?

a. Differences in the magnitude of financial distress costs and the volatility of cash flows can explain the differences in the use of leverage across industries. b. In a perfect capital market, the cost of capital of levered equity increases with the firms market value equity-debt ratio. c. In perfect capital markets, a firms financing decisions do not reveal new information about its investments. d. Because firms pay taxes on their profits after interest payments are deducted, firms with higher interest expenses could pay a lower amount of corporate tax.