Question: Given corporate taxes, why does adding debt to the capital structure increase firm value? A. Extra cash flow goes to the firm's investors rather than

Given corporate taxes, why does adding debt to the capital structure increase firm value?

A. Extra cash flow goes to the firm's investors rather than the tax authorities.

B. Earnings before interest and taxes are fully taxed at the corporate tax rate.

C. Personal tax rates are the same as marginal corporate tax rates.

D. All of the above

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