The Supply Depot Is Considering Issuing $1 Million in Bonds

Multiple Choice

The Supply Depot is considering issuing $1 million in bonds but their financial staff has advised that if they do,the value of the firm will decrease.Given this advice,you know the staff believes the firm:

A) currently is all-equity financed and adding debt will cause a decrease in firm value.
B) wants to issue too few bonds to obtain the most benefit from debt.
C) will suffer from a decrease in its WACC if the bonds are issued.
D) is at,or has exceeded,its optimal debt-equity ratio.
E) will realize greater tax benefits by issuing equity securities.