Which of the following is(are) false regarding capital structure and debt?I. At first, debt costs are small, but expected costs of debt increase as leverage rises. II. The M&M Theory suggests that in a world with taxes, capital structure doesn't matter. III. Firm value is maximized when D/E reaches about 35% to 45%, then begins to decline as leverage threatens the cash flow of the firm. IV. In general, debt has a higher cost than equity for a corporation. a. Only I and II are falseb. Only II and III are falsec. Only III and IV are falsed. Only II and IV are falsee. Only I and IV are false
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Which of the following is(are) false regarding capital structure and debt?I. At first, debt costs ar...
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