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