Which one of the following statements related to WACC is correct for a firm that uses debt in its capital structure?
The WACC will remain constant unless a firm retires some of its debt.
The WACC should decrease as the firm's debt-equity ratio increases.
The weight assigned to preferred stock decreases as the market value of the stock increases.
The WACC will decrease as the corporate tax rate decreases.
The weight of equity is based on the number of shares outstanding and the book value per share.