MM Proposition I with taxes supports the theory that:
A) there is a positive linear relationship between the amount of debt in a levered firm and the firm's value.
B) the value of a firm is inversely related to the amount of leverage used by the firm.
C) the value of an unlevered firm is equal to the value of a levered firm plus the value of the interest tax shield.
D) a firm's cost of capital is the same regardless of the mix of debt and equity used by the firm.
E) a firm's weighted average cost of capital increases as the debt-equity ratio of the firm rises.
A) there is a positive linear relationship between the amount of debt in a levered firm and the firm's value.
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