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MM Proposition I with no tax supports the argument that: a . business risk determines the return on assets. b . a firm should borrow
MM Proposition I with no tax supports the argument that:
a business risk determines the return on assets.
b a firm should borrow money to the point where the tax benefit from debt is equal to the cost of the increased probability of financial distress.
c financial risk is determined by the debtequity ratio.
d it is completely irrelevant how a firm arranges its finances.
e the cost of equity rises as leverage rises.
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