The reason that mm proposition i does not hold in the, Ask an Expert

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The reason that MM Proposition I does not hold in the presence of corporate taxation is because:

A. earnings per share are no longer relevant with taxes.

B. bondholders require higher rates of return than stockholders do.

C. dividends become a tax shield.

D. levered firms pay less taxes compared with identical unlevered firms.

E. debt is more expensive than equity.

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92384480

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