Which of the Following Statements Is False

question 69

Multiple Choice

Which of the following statements is false?

• A)With zero taxes and zero bankruptcy costs, the value of the firm is independent of its debt-equity ratio.
• B)With taxes and zero bankruptcy costs, the value of the firm reaches a maximum and then declines as the debt-equity ratio increases.
• C)With taxes and bankruptcy costs, the value of the firm reaches a maximum and then declines as the debt-equity ratio increases.
• D)With taxes and bankruptcy costs, the value of the firm is independent of its debt-equity ratio.

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