The BongoBongo Drum Co. uses debt and equity in its capital structure and has positive earnings. An increase in the firm's debt rating from BBB to A would decrease the firm's WACC.

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An increase in the firm's debt rating from BBB to A indicates an improvement in the firm's creditworthiness, which typically leads to lower interest rates on its debt. Lower interest rates decrease the cost of debt, which in turn decreases the Weighted Average Cost of Capital (WACC) since WACC is a blend of the costs of debt and equity.