Which One of These Statements Is a Correct Implication of the Pecking

Multiple Choice

Which one of these statements is a correct implication of the pecking order theory?

A) External financing should be limited to debt issues.
B) The target debt level occurs when the marginal benefit of debt equals the marginal cost of debt.
C) Companies like financial slack so they can reduce their external capital needs.
D) Internally funded projects lower the market value of equity.
E) Profitable firms use more debt.