M&M Proposition I with Tax Implies That The

Multiple Choice

M&M Proposition I with tax implies that the:

A) weighted average cost of capital decreases as the debt-equity ratio increases.
B) value of a company is inversely related to the amount of leverage used by that company.
C) value of an unlevered company equals the value of a levered company plus the value of the interest tax shield.
D) cost of capital is the same regardless of the mix of debt and equity used.
E) cost of equity increases as the debt-equity ratio decreases.