M & M Proposition I with Tax Supports the Theory

Multiple Choice

M & M Proposition I with tax supports the theory that:

A) a firm's weighted average cost of capital decreases as the firm's debt-equity ratio increases.
B) the value of a firm is inversely related to the amount of leverage used by the firm.
C) the value of an unlevered firm is equal to the value of a levered firm plus the value of the interest tax shield.
D) a firm's cost of capital is the same regardless of the mix of debt and equity used by the firm.
E) a firm's cost of equity increases as the debt-equity ratio of the firm decreases.