Question: M&M Proposition I with tax implies that: A. The value of a firm is inversely related to the amount of leverage used by the firm.

M&M Proposition I with tax implies that:

A. The value of a firm is inversely related to the amount of leverage used by the firm.

B. A firm's cost of capital is the same regardless of the mix of debt and equity used by the firm.

C. A firm's cost of equity increases as the debt-equity ratio of the firm decreases.

D. A firm's weighted average cost of capital decreases as the firm's debt-equity ratio increases.

E. The value of an unlevered firm is equal to the value of a levered firm plus the value of the interest tax shield.

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