QUESTION 32 m e Contrary to the perfect capital market sumptions of Modigliani and Mile the real wo our less than perfect world, which of the following are true? n there we are m et mensen dedactie, there we costs of financial distress, etc. In Firm value and WACC are independent of the firm's capital structure Each firm has an optimal capital structure where WACC is maximired. Each firm has an optimal capital structure where firm value is minimized Firm value increases and WACC destas initially as more debt is added to the firm's capital structure, however, there comes a point where adding additional debt generates potential costs of financial distress that outweigh the benefits of further reducing After this point, fimm value starts to dessed WACC Marts to more detis added al det meste potential costs of Firm value s and WACC i n itially as more debitis added to the firm's capital structure, however, there comes a point where adding financial distress that outweigh the benefits of further reducing taxes. After this point, firm value and WACC start to descasas more debt is added