19. M\&M theory with tax (but no bankruptcy cost) supports which of the following: I. The value of the firm increases by the PV of the annual interest tax shield. II. Cost of equity increases as the firm's debt-equity ratio increases. III. leverage increases both the cost of equity and the overall cost of capital IV. Business risk increases as the firm's debt-equity ratio increases. A. I only. B. I and II only. C. II and IV only D. I, III and IV only E. None of the above 20. You currently own 500 shares of GoGreen Inc.. GoGreen is an all-equity firm that has 150,000 shares of stock outstanding at a market price of \$25 a share. The company's earnings before interest and taxes are $200,000. Assume no corporate taxes. GoGreen has decided to issue $1,125,000 of debt at 10 percent interest. This debt will be used to repurchase shares of stock of the company. If you prefer the original capital structure of 100% equity and the associated payoffs, you will take which of the following actions to achieve the original payoffs (under 100% equity)? A. borrow at 10% to purchase 500 additional shares of GoGreen B. borrow at 10% to purchase 350 additional shares of GoGreen C. borrow at 10% to purchase 250 additional shares of GoGreen D. sell 150 shares of GoGreen and loan out the proceeds at 10% E. sell 350 shares of GoGreen and loan out the proceeds at 10%