Question: Firm A and B have identical cash flows and risks. Both face a corporate tax rate of 25%. Firm A is financed with all equity.

Firm A and B have identical cash flows and risks. Both face a corporate tax rate of 25%. Firm A is financed with all equity. Firm B is financed with 50% equity and 50% debt. Which of the following is true? (select all that apply)

WACC A is greater than WACC B

WACC A is less than WACC B

Enterprise Value of firm A is greater than Enterprise Value of Firm B

Enterprise Value of firm A is less than Enterprise Value of firm B

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