Which One of the Following Statements Is the Core Principle

Multiple Choice

Which one of the following statements is the core principle of M&M Proposition I,without taxes?

A) A firm's WACC is directly related to the firm's debt-equity ratio.
B) Levered firms have greater value than unlevered firms.
C) The interest tax shield increases the value of a firm.
D) A firm's cost of equity is directly related to the firm's debt-equity ratio.
E) The capital structure of a firm is totally irrelevant.