The Reason That MM Proposition I Does Not Hold in the Presence

Multiple Choice

The reason that MM Proposition I does not hold in the presence of corporate taxation is because:

A) bondholders require higher rates of return compared with stockholders.
B) levered firms pay less taxes compared with identical unlevered firms.
C) dividends are no longer relevant with taxes.
D) earnings per share are no longer relevant with taxes.
E) All of the above.