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When a firm pays tax, MMs Proposition I no longer holds, and the capital structure of the firm can be important due to the: A.

When a firm pays tax, MMs Proposition I no longer holds, and the capital structure of the firm can be important due to the:

A. lower tax rates on dividends than on debt

B. higher tax rates on retained earnings than on debt

C. Interest tax shield

D. higher operating income from lower dividends

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