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MM Proposition II with taxes: MM Proposition II with taxes: supports the argument that the cost of equity decreases as the debt-equity ratio increases. reveals
MM Proposition II with taxes: MM Proposition II with taxes: supports the argument that the cost of equity decreases as the debt-equity ratio increases. reveals that the tax shield on debt causes an increase in the value of a firm. reaches the final conclusion that the capital structure decision is irrelevant to the value of a firm. explains how a firms WACC increases with the use of financial leverage. supports the argument that business risk is determined by the capital structure employed by a firm
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