MM Proposition I with Tax Is Based on the Concept

Multiple Choice

MM Proposition I with tax is based on the concept that the:

A) optimal capital structure is the one that is totally financed with equity.
B) capital structure of the firm does not matter because investors can use homemade leverage.
C) firm is worse off levered than unlevered.
D) value of the firm increases as total debt increases because of the interest tax shield.
E) cost of equity increases as the debt-equity ratio of a firm increases.