23.

The MM theory with taxes implies that firms should issue maximum debt. In practice, this does not occur because: Multiple Choice O debt is more risky than equity. bankruptcy is a disadvantage to debt. the weighted average cost of capital is inversely related to the debt-equity ratio. the weighted average cost of capital O O O O bankruptcy is a disadvantage to debt. the weighted average cost of capital is inversely related to the debt-equity ratio. the weighted average cost of capital is directly related to the debt-equity ratio. U.S. regulations require the debt- equity ratio of publicly-traded firms to be in the range of 3 to 7