M&M Proposition II Is the Proposition That

question 157

Multiple Choice

M&M Proposition II is the proposition that:

• A) The value of a firm is independent of the firm's capital structure.
• B) States the value of a firm is dependent upon the interest tax shield.
• C) The levered value of a firm is equal to the unlevered value plus the interest tax shield.
• D) A firm's cost of equity capital is a positive linear function of the firm's capital structure.
• E) The levered value of a firm is equal to the unlevered value plus the present value of the interest tax shield.

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