M&M theory with tax (but no bankruptcy cost) supports which of the following: I. a firm's...
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M&M theory with tax (but no bankruptcy cost) supports which of the following: I. a firm's WACC decreases as the firm's debt-equity ratio increases. II. The value of the firm increases by the PV of the annual interest tax shield. III. Cost of Equity decreases as the firm's debt-equity ratio increases. IV. Leverage reduces the cost of equity, but increases the overall cost of capital A. I only. B. I and II. C. I, II, and III D. All of them M&M theory with tax (but no bankruptcy cost) supports which of the following: I. a firm's WACC decreases as the firm's debt-equity ratio increases. II. The value of the firm increases by the PV of the annual interest tax shield. III. Cost of Equity decreases as the firm's debt-equity ratio increases. IV. Leverage reduces the cost of equity, but increases the overall cost of capital A. I only. B. I and II. C. I, II, and III D. All of them
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Related Book For
Fundamentals of Corporate Finance
ISBN: 978-1259722615
9th edition
Authors: Richard Brealey, Stewart Myers, Alan Marcus
Posted Date:
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