According to Modigliani and Miller$$s Proposition II without taxes:

According to Modigliani and Miller$$s Proposition II without taxes:

Corporate leverage is determined by balancing the tax$-$saving benefits of debt against dead$-$weight costs of bankruptcy.

The cost of equity increases as the use of debt in the capital structure

Investment and the capital structure decisions are interdependent

The capital structure decision has no effect on the cost of equity