MM Proposition II with taxes:

1-has the same general implications as MM Proposition II without taxes.

2-reveals how the interest tax shield relates to the value of a firm.

3-supports the argument that business risk is determined by the capital structure employed by a firm.

4-supports the argument that the cost of equity decreases as the debt-equity ratio increases.

5-reaches the final conclusion that the capital structure decision is irrelevant to the value of a firm.