E. 1.6b/ 13. Which one of the following is true about M&M Proposition II without taxes? A. M&M Prop II is a realistic model assumption. B. The cost of equity capital has a positive linear relationship with a firm's capital structure. C. The cost of equity capital varies in response to changes in a firm's capital structure. D. The value of a firm is independent of the firm's capital structure. E. The value of a firm is dependent on the firm's capital structure 14. Which one of the following is the costs that are directly associated with bankruptcy, such as the legal and administrative expenses? A. M&M Proposition II with no taxes 1 B. Financial Distress Cost C. Indirect Bankruptcy Cost D. Direct Bankruptcy Cost E. M&M Proposition I with taxes