Which one of the following supports the theory that the value of a firm increases as the firm's level of debt increases?
A)M&M Proposition I without taxes
B)M&M Proposition II without taxes
C)M&M Proposition I with taxes
D)Static theory of capital structure
E)No theory suggests this.

Question

Quizplus · Accepted Answer

M&M Proposition I with taxes suggests that the value of a firm increases with leverage due to the tax shield on debt.

Which One of the Following Supports the Theory That the Value