You 100% own an unlevered company and are weighing up whether you should fund half of its assets with debt and use the proceeds to pay a large dividend to yourself.

You believe that there are potential benefits from interest tax shields, though you're not worried about financial distress costs.

Which of the following statements about the proposal to increase leverage is NOT correct? The company's:

Select one:

a.

WACC before tax and asset beta will be unaffected.

b.

WACC after tax will be lower.

c.

rE and BetaE will be higher.

d.

Equity market capitalisation will be higher.

e.

Asset and enterprise values will be higher.