Although the use of debt provides tax benefits to the firm, debt also put A general rule for managers to follow is to set the firm's capita] structure The proposition that the value of the firm is independent of its capital structures The proposition that the cost of equity is a positive linear function of Debt The increase in risk to equity holders when financial leverage is introduce What is the cost of equity for a firm if the corporate tax rate is 40%? ratio of 1.5. If it had no debt, its cost of equity would be 16%. Its current The MM theory with taxes implies that firms should issue ma true because