Question

MM Proposition I with taxes is based on the concept that the: Multiple Choice optimal capital structure is the one that is totally financed with equity.capital structure of the firm does not matter because investors can use homemade leverage. firm is better off with debt based on the weighted average cost of capital. presence of taxes causes debt to be valuable to a firm.

Answer 1

Answer:

Option D is correct.

Presence of taxes cause debt to be valuable to to a firm

Explanation:

MM Proposition I with taxes is based on the concept that the Presence of taxes cause debt to be valuable to to a firm.

The first proposition essentially claims that the company's capital structure does not impact its value. Since the value of a company is calculated as the present value of future cash flows, the capital structure cannot affect it.