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12. M&M Proposition I with no tax supports the argument that (a) Business risk determines the return on assets The cost of equity rises as
12. M&M Proposition I with no tax supports the argument that (a) Business risk determines the return on assets The cost of equity rises as the leverage rises It is completely irrelevant how a firm arranges its finances A firm should borrow money to the point where the tax benefit from debt is equal to the cost of the increased probability of financial distress
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