A Moving to another question will save this response. Question 11 Consider an all-equity firm with beta of 1.2. Suppose that the risk-free rate is 2% and the market risk premium is 10%. Tax rate is 21%. Which statement below is wrong? 1. If the firm increases its leverage while keeping assets the same, then the equity beta will be above 1.2. 2. For a project with a beta of 1.3, the appropriate discount rate should be above the WACC of the firm. 3. If the firm increases leverage, the cost of equity could be lower than 14% 4. The WACC of this firm is 14% 5. The firm can benefit from the tax shield by issuing additional amount of debt. Ly A Moving to another question will save this response