M & M Proposition II with Taxes

question 63

Multiple Choice

M & M Proposition II with taxes:

• A)has the same general implications as M & M Proposition II without taxes.
• B)states that a firm's capital structure is irrelevant.
• C)supports the argument that business risk is determined by the capital structure decision.
• D)supports the argument that the cost of equity decreases as the debt-equity ratio increases.
• E)concludes that the capital structure decision is irrelevant to the value of a firm.

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