Assume there are no personal or corporate income taxes and that the firm's WACC is unaffected by its capital structure. Which of the following is true?
A) A firm's cost of equity depends on the firm's business and financial risks.
B) The value of the firm is dependent on its capital structure.
C) The cost of equity increases as the firm's leverage decreases.
D) Tax minimization occurs at optimal WACC.
E) WACC becomes irrelevant without taxes.
Correct Answer:
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