Consider the Following Two Statements: (I) a Leveraged Recapitalization Is

Consider the following two statements: (i) A leveraged recapitalization is only recommended if the acquiring firm's debt level was below the
Optimum before the recapitalization.
(ii) With a leveraged recapitalization, the equity price of the target may rise because of the
Increased tax shield from greater debt.

A) (i) is correct, (ii) is incorrect.
B) (ii) is correct, (i) is incorrect.
C) Both (i) and (ii) are correct.
D) Both (i) and (ii) are incorrect.
E) None of the above.