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Suppose the applicable tax rate is 20 percent. Which one of the following is correct? A. the optimal capital structure is the one that is
Suppose the applicable tax rate is 20 percent. Which one of the following is correct?
A. the optimal capital structure is the one that is totally financed with equity.
B. capital structure is irrelevant because investors and companies have differing tax rates.
C. WACC is unaffected by a change in the companys capital structure.
D. the value of a taxable company increases as the level of debt increases.
E. the cost of equity decreases as the debt-equity ratio increases.
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