Question: A firm currently has a debt - to - equity ratio ( D / E ) of 5 0 % . If the firm changes

A firm currently has a debt-to-equity ratio (D/E) of 50%. If the firm changes its debt-to-equity ratio to 40%, all else constant, this change will:
a. Increase the total debt level of the firm.
b. Decrease the proportionate use of equity financing.
c. Cause the NPV of projects under consideration to decrease.
d. Decrease the firm's WACC.
e. Not affect the firm's capital budgeting decisions.

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