Which Is Not True About Debt Financing and the Weighted

Multiple Choice

Which is not true about debt financing and the weighted average cost of capital?

A) Debt is usually the cheapest source of financing
B) As the level of debt increases beyond the optimum capital structure,the cost of capital increases
C) No debt in the firm's capital structure will minimize the firm's weighted-average cost of capital
D) The cost of debt and the weighted average cost of capital both go down as the tax rate goes up.