Please help me with this assignment :)

a.

A firms ________ is referred to as its capital structure.

• mix of current and fixed assets

• amount of capital invested in the firm

• typical amount of dividends it pays

• mix of debt and equity used to finance its assets

• amount of cash versus receivables

b. A firm should always select the capital structure that:

• produces the highest cost of capital.

• maximizes the value of the firm.

• minimizes taxes.

• maximizes current dividends.

• has no debt.

c. In the absence of taxes, the capital structure chosen by a firm is irrelevant because of:

• taxes.

• the interest tax shield.

• the relationship between dividends and earnings per share.

• the effects of leverage on the cost of equity.

• homemade leverage.

d. According to ________ the value of the levered firm equals the value of the unlevered firm.

• MM Proposition I with no tax

• MM Proposition II with no tax

• MM Proposition I with tax

• MM Proposition II with tax

• both MM Proposition I with tax and MM Proposition I without tax

e. MM Proposition II with taxes:

• explains how a firms WACC increases with the use of financial leverage.

• reveals that the tax shield on debt causes an increase in the value of a firm.

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

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

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