If a Firm Has the Optimal Amount of Debt, Then

Multiple Choice

If a firm has the optimal amount of debt, then the:

A) direct financial distress costs must equal the present value of the interest tax shield.
B) value of the levered firm will exceed the value of the firm if it were unlevered.
C) value of the firm is minimized.
D) value of the firm is equal to V_L + T_C * D.
E) debt-equity ratio is equal to 1.0.