The MM theory with taxes implies that firms should issue maximum debt. In practice, this is not

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The MM theory with taxes implies that firms should issue maximum debt. In practice, this is not true because:

I) Debt is more risky than equity

II) Bankruptcy and its attendant costs is a disadvantage to debt

III) The payment of personal taxes may offset the tax benefit of debt

A. I only

B. II only

C. III only

D. II and III only

Related Book For answer-question

Financial Accounting Theory and Analysis Text and Cases

ISBN: 978-1118582794

11th edition

Authors: Richard G. Schroeder, Myrtle W. Clark, Jack Cathey

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Posted Date: Dec 24, 2020 06:45 AM

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The MM theory with taxes implies that firms should issue maximum debt. In practice, this is not

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option D is correct II and III only Explanation The MM th... View the full answer

Financial Accounting Theory and Analysis Text and Cases

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