Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

According to Modigliani and Miller, in a world with taxes, the cost of equity will always rise with increased gearing because A. the interest on

According to Modigliani and Miller, in a world with taxes, the cost of equity will always rise with increased gearing because

A.

the interest on debt is allowable against tax

B.

the tax shield on debt increases the value of the shareholders' equity

C.

the firm is more likely to go bankrupt

D.

the return to shareholders becomes more variabl

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Entrepreneurial Finance

Authors: Steven Rogers

4th Edition

1260461440, 978-1260461442

More Books

Students also viewed these Finance questions

Question

=+26.14. 1 Show that y has no point masses if 2(t) is integrable.

Answered: 1 week ago

Question

Evaluate employees readiness for training. page 275

Answered: 1 week ago