1. All else constant, the WACC for a risky, levered firm will decrease if:
a) the firm's bonds start selling at a premium rather than at a discount
b) corporate taxes are eliminated
c) the firm replaces some of its debt with preferred stock
d) the dividen yield on the common stock increases
2. If your tax rate increase then your ____
a) WACC decreases
b) Cost of Equity decreases
c) Cost of Equity increases
can you also explain why?