Question
21. Consider the Modigliani and Miller (M&M) theory of capital structure. Assume there are NO taxes and NO bankruptcy costs. Which of the following statements
21. Consider the Modigliani and Miller (M&M) theory of capital structure. Assume there are NO taxes and NO bankruptcy costs. Which of the following statements is/are correct? I. Firm value always increases as more debt is added II. Firm value stays constant as more debt is added
III. WACC always decreases as more debt is added
IV. WACC always increases as more debt is added
V. WACC stays constant as more debt is added
A) II and III only B) I and IV only C) I and III only D) II and V only E) None of the statements are correct
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Essentials Of Managerial Finance
Authors: Scott Besley, Eugene F. Brigham
13th Edition
0324258755, 9780324258752
