MM Proposition I with tax supports the theory that

Multiple Choice

A. a firm's cost of capital is the same regardless of the mix of debt and equity used by the firm.

B. a firm's weighted average cost of capital increases as the debt-equity ratio of the firm increases.

C. Incorrect the value of a firm is inversely related to the amount of leverage used by the firm.

D. there is a positive linear relationship between the debt-to-equity ratio and firm value.