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MM Proposition I with taxes is based on the concept that the A. optimal capital structure is the one that is totally financed with equity.

MM Proposition I with taxes is based on the concept that the

A. optimal capital structure is the one that is totally financed with equity.

B. firm is worse off levered than unlevered.

C. capital structure of the firm does not matter because investors can use homemade leverage.

D. value of the firm increases as total debt increases because of the interest tax shield.

E. cost of equity increases as the debt-equity ratio of a firm increases.

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