Which of the following statements is correct? a. suppose a firm has less than its optimal amount of debt. increasing its use of debt to the point where it is at its optimal capital structure will decrease the costs of both debt and equity. b. if a firm's after-tax cost of equity exceeds its after-tax cost of debt, it can always reduce its wacc by increasing its use of debt. c. in general, a firm with low operating leverage also has a small proportion of its total costs in the form of fixed costs. d. a firm with a relatively high business risk is more likely to increase its use of financial leverage than a firm with low business risk, assuming all else equal. e. there is no reason to think that changes in the personal tax rate would affect firms' capital structure decisions.

The following data is provided for garcon company and pepper company. garcon company pepper company beginning finished goods inventory $12,600 $16,900 beginning work in process inventory 17,600 21,600 beginning raw materials inventory 7,700 10,650 rental cost on factory equipment 28,500 23,050 direct labor 23,000 39,800 ending finished goods inventory 18,500 14,100 ending work in process inventory 26,500 19,800 ending raw materials inventory 6,800 7,600 factory utilities 12,300 17,750 factory supplies used 13,000 4,400 general and administrative expenses 31,000 59,500 indirect labor 2,450 9,580 repairs—factory equipment 6,860 3,700 raw materials purchases 37,000 66,000 selling expenses 51,200 48,700 sales 238,530 337,510 cash 29,000 17,200 factory equipment, net 217,500 118,825 accounts receivable, net 16,800 24,200 compute the total prime costs for both garcon company and pepper company.