1. Debt financing is desirable because each year taxes are reduced by the amount of ?.. times ?. and the total value of the firm is increased by the ?... times ?...

2. If one includes taxes into the consideration of Miller-Modigliani Proposition #1, the value of the firm financed only by equity is:

A) less than that for a levered firm by the amount of interest

B) less than that for a levered firm by the value of the tax shield

C) more than that for a levered firm by the amount of interest

D) more than that for a levered firm by the value of the tax shield