$01$:$59$:$23$

Time Remaining

$2$

Multiple Choice $1$ point

How does the introduction of corporate taxes modify Modigliani and Miller's original theory on capital structure?

It makes equity financing preferable because interests are tax$-$deductible

It eliminates the trade$-$off between debt and equity financing

It makes debt financing more preferable because interest payments reduce taxable income

It suggests that financial distress costs have no impact on firm value