In a World with Corporate Taxes,MM Theory Implies That That

question 36

Multiple Choice

In a world with corporate taxes,MM theory implies that that all firms should

• A)maintain a constant value.
• B)decrease in value as the leverage of the firm increases.
• C)choose an all-debt capital structure.
• D)select the capital structure that maximizes the firm's WACC.
• E)select the capital structure that equates the marginal cost of debt with the marginal benefits.

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