Which One of These Statements Is Correct for a Levered

Multiple Choice

Which one of these statements is correct for a levered firm?

A) An increase in tax rates will decrease the value of the firm.
B) An increase in financial distress costs increases the value of a firm.
C) To obtain its maximum value,a firm should select an all-equity capital structure.
D) The value of a firm is maximized when its cost of capital is also maximized.
E) The optimal level of debt for a firm results in the value of that firm being maximized.