When a firm pays tax,MM's Proposition I no longer holds,and the capital structure of the firm can be important due to the:

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When a firm pays tax, the interest tax shield becomes important as the interest paid on debt is tax-deductible, which reduces the taxable income of the firm. This can lead to a lower overall tax liability for the firm, which can impact its capital structure. Therefore, MM's Proposition I no longer holds, and the capital structure of the firm becomes important due to the interest tax shield. The other choices are incorrect as they do not directly relate to the tax implications on capital structure.

When a Firm Pays Tax,MM's Proposition I No Longer Holds,and