Question
Based on M&M Proposition 2 with taxes, the weighted average cost of capital: A. is equal to the aftertax cost of debt. B. has a
Based on M&M Proposition 2 with taxes, the weighted average cost of capital:
A. is equal to the aftertax cost of debt.
B. has a linear relationship with the cost of equity capital.
C.is unaffected by the tax rate.
D. decreases as the debt-equity ratio increases.
Answer is B but I want to know the reasons :)
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The Fraud Audit Responding To The Risk Of Fraud In Core Business Systems
Authors: Leonard W. Vona
1st Edition
0470647264, 978-0470647264
