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19. Which of the following statements are correct in relation to M&M theory with taxes, but no bankruptcy costs? A. Before tax cost of debt

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19. Which of the following statements are correct in relation to M&M theory with taxes, but no bankruptcy costs? A. Before tax cost of debt decreases when leverage increases. B. The value of the firm decreases when leverage increases. C. The cost of equity decreases when leverage increases. D. Weighted average cost of capital (WACC) decreases when leverage increases. 20. D. L. Tuckers has $57,000 of debt outstanding that is selling at par and has a coupon rate of 7.15 percent. The tax rate is 21 percent. What is the present value of the tax shield? A. $11,647 B. $11,970 C. $13,106 D. $12,200 E. None of the above I 21. Which of the following statements are correct in relation to M&M Proposition II with no taxes, no bankruptcy costs? I. The required return on total assets is equal to the weighted average cost of capital. II. The cost of equity increases when leverage increases. III. Financial risk is determined by the debt-equity ratio. A. I only B. I and III only C. I and II only D. I, II and III only

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