$16$

MM Proposition I with taxes supports the theory that:

Multiple Choice

$60\mathrm{.}1251$

there is a positive Inear relationship between the proportion of debt wersus equity in a levered firm and the firm's value.

the volue of a frm is inversely related to the amount of leverage used by the firm.

the value of an unlevered firm is equal to the value of a levered firm plus the value of the interest tax shield.

a firm's cost of captal is the same regardess of the mix of debt and equity used by the firm.

firm's weighed average cost of capital increases as the debt$-$equity ratio of the frmises.