Why is the value of the levered and unlevered firms are identical under Proposition I of M&M?

Select one:

a. Increases in leverage do not cause earnings per share to increase, so value does not increase.

b. Earnings per share are diluted by the increased debt and are spread to debtholders.

c. Earnings per share are increased but the taxes on the increased earnings keep the earnings to the levered and unlevered firms identical.

d. The increased costs of bankruptcy due to the debt cause the firm values to be identical.

e. The discount rate on earnings is greater for the levered firm versus the unlevered firm.