In a World with Corporate Taxes,MM Theory Implies That That

Multiple Choice

In a world with corporate taxes,MM theory implies that that all firms should

A) maintain a constant value.
B) decrease in value as the leverage of the firm increases.
C) choose an all-debt capital structure.
D) select the capital structure that maximizes the firm's WACC.
E) select the capital structure that equates the marginal cost of debt with the marginal benefits.