In Miller's Model, When the Quantity [(1-Tc)(1-Ts) = (1-Tb)], Then

Multiple Choice

In Miller's model, when the quantity [(1-Tc) (1-Ts) = (1-Tb) ], then:

A) the firm should hold no debt.
B) the value of the levered firm is greater than the value of the unlevered firm.
C) the tax shield on debt is exactly offset by higher personal taxes paid on interest income.
D) the tax shield on debt is exactly offset by higher levels of dividends.
E) the tax shield on debt is exactly offset by higher capital gains.