Cash on balance sheet: No need to access capital markets for financing,
the only cost is the opportunity cost of the cash.
Debt: Interest expense is after-tax, so there is a tax shield here. Also,
debt holders have higher priority on assets in case of a bankruptcy, so
they have less risk.
Stock: Issuing new shares will dilute net income. Equity is the most
expensive because equity holders take on the most risk with the lowest
claim on assets in case of a bankruptcy, so they expect the highest