M&M with no tax

It seems that you have not watched my free lectures on this because I explain this precise point in my free lectures on the impact of financing. If you are still unsure after watching the lectures, when watch my free Paper FM (was Paper F9) lectures on the effect of changes in gearing, in which I draw the graphs and illustrate with numbers. (The WACC is not totall cost - it is the weighted average. With more gearing, there is more weighting given to the cheap cost of debt.)