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Miller and Modigliani argued that in the absence of taxes as companies increase their leverage: Their cost of equity rises as more of the less
- Miller and Modigliani argued that in the absence of taxes as companies increase their leverage:
- Their cost of equity rises as more of the less expensive debt is added, leaving the WACC unchanged.
- Their cost of equity rises and debt costs fall.
- Both their equity and debt costs rise, but the cost of equity rises faster than the debt cost.
- None of the above.
- Their cost of equity rises as more of the less expensive debt is added, leaving the WACC unchanged.
- Their cost of equity rises and debt costs fall.
- Both their equity and debt costs rise, but the cost of equity rises faster than the debt cost.
- None of the above.
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