According to M&M Proposition I with Taxes, the Value of a Levered

question 90

Multiple Choice

According to M&M Proposition I with taxes, the value of a levered firm will increase when the:

• A)value of the unlevered firm increases.
• B)tax rate is decreased.
• C)debt-equity ratio is lowered.
• D)interest rate on the debt is lowered.
• E)interest rate on the debt is increased.

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