Ma The Modigliani-Miller (MM) Proposition I without taxes states: O a. Afirm cannot change the total value of its outstanding securities by changing its capital structure proportions. O b. When new projects are added to the firm the firm value is the sum of the old value plus the new OC. Managers can make correct corporate decisions that will satisfy all shareholders if they select projects that maximize value. Od the determination of value must consider the timing and risk of the cashflows none of the above. re 24 The firm's capital structure refers to O the way a fiemiests sants Ob the amount of equity or capital in the form Od the amount of dividends a fim pays Od the way in which a fam's assets are financed O how much cash the firm holds M Which of the following statements is CORRECT? - A firm can use retained earrings without paying a flotation cost. Therefore, while the cont of retained earnings is not zero, its cost is generally lower than the after tax cost of debt b. The capital structure that minimizes a firm's weighted average cost of capital is also the capital structure that maximizes its stock pre oc The capital structure that minimizes the firm's weighted average cost of capital is alio the capital structure that maximizes its earnings per share da firm finds that the cost of debt is less than the cost of equity increasing its debt ratio must reduces WACC Other things held constant il corporate tax rates declined then the Modigliani Miler ta adjusted tradeoff theory would suggest that firms should increase the use of dett e