Question: For a levered firm, all else equal, an increase in a firms tax rate from 15% to 40% would result in: A. a decrease in

For a levered firm, all else equal, an increase in a firms tax rate from 15% to 40% would result in:

A. a decrease in the after-tax cost of debt and a decrease in the cost of equity.

B. an increase in the after-tax cost of debt and an increase in the cost of equity.

C. an increase in the after-tax cost of debt but a decrease in the cost of equity.

D. a decrease in the after-tax cost of debt but an increase in the cost of equity.

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