MM Proposition I with corporate taxes (i.e. MM Proposition I with "no taxes" assumption relaxed only) states that:

I)Capital structure can affect firm value by an amount that is equal to the present value of the interest tax shield,

II)By raising the debt-to-equity ratio (i.e. the use of debt), the firm can lower its taxes and thereby increase its total cash flow to bondholders and shareholders,

III)Firm value is maximized at an all debt capital structure,

IV)The value of a levered firm (firm with debt) is always lower than the value of an unlevered firm (firm without debt).

a.I and II only

b.I and III only

c.II and III only

d.I, II, and III only

e.I , II and IV only