MM Proposition II,with Taxes

Multiple Choice

MM Proposition II,with taxes

A) reaches the final conclusion that the capital structure decision is irrelevant to the value of a firm.
B) reveals how the interest tax shield relates to the value of a firm.
C) supports the argument that business risk is determined by the capital structure employed by a firm.
D) has the same general implications as MM Proposition II,without taxes.
E) supports the argument that the cost of equity decreases as the debt-equity ratio increases.