Consider the Modigliani and Miller (M&M) theory of capital structure. Assume there are taxes and 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