Suppose that Modigliani-Miller (MM) propositions with tax hold. As a CEO of QUT Corporation, you have to choose the firm's capital structure that maximizes the firm value.

(a) What is the optimal capital structure of the company? Explain why. (Your answer must be no more than 200 words. Your mark will be penalized for exceeding 200 words limit.)

(b) Is the capital structure, that you suggested in (a), still optimal in the real world? Explain why you believe it works or does not work in practice. (Your answer must be no more than 200 words. Your mark will be penalized for exceeding 200 words limit.) (