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.

Note: We will consider the existence of corporate tax here.