Which of the following statements is FALSE?

Select one:

A. If a firm is unlevered, all of the free cash flows generated by its assets are available to be paid out to its equity holders.

B. If a firm is levered, all of the free cash flows generated by its assets are available to be paid out to only its debt holders.

C. While debt itself may be cheap, it increases the risk and therefore the cost of capital of the firm's equity.

D. If a firm is financed with both equity and debt, the appropriate cost of capital is the weighted average cost of capital (WACC).

E. The cost of capital of levered equity is equal to the cost of capital of unlevered equity plus a premium that is proportional to the market value debt-equity ratio.