Which of the following statements is most correct?
A - Firm can use retained earnings without paying a flotation cost. Therefore, while the cost of retained earnings is not zero, the cost of retained earnings is generally lower than the after-tax cost of debt financing.
B- The capital structure that minimizes the firm’s cost of capital is also the capital structure that maximizes the firm’s stock price.
C- The capital structure that minimizes the firm’s cost of capital is also the capital structure that maximizes the firm’s earnings per share.
D - If a firm finds that the cost of debt financing is currently less than the cost of equity financing, an increase in its debt ratio will always reduce its cost of capital.