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Which statement about capital structure is the most correct? O a. A company should always try to reduce its debt because of the high bankruptcy

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Which statement about capital structure is the most correct? O a. A company should always try to reduce its debt because of the high bankruptcy risk associated with debt. A company should aim to have 100% equity financing if it is possible. O b. The more the company borrows, the higher will be its tax shields, therefore a company will always prefer to issue debt than equity. O c. Because the cost of debt is cheaper than the cost of equity, a company should use as much debt as possible to finance their projects O d. Lenders rank ahead of shareholders when the company goes bankrupt. To protect shareholders interests, it is always preferred to issue equity rather than debt. O e. The more the company borrows, the lower will be the after-tax WACC. This increases the present value of the firm free cash flows which represents the value of the levered firm

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