Question: Faust Inc., is considering levering up its capital structure from 10% debt to 40% debt. Which of the following statements is FALSE? a. The cost

Faust Inc., is considering levering up its capital structure from 10% debt to 40% debt. Which of the following statements is FALSE?

a. The cost of equity will increase.

b. The free cash flow will increase

c. The value of the tax shield will increase.

d. The amount of taxes paid will decrease.

e. The risk of bankruptcy will increase.

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