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The Miles-Ezzell Formula for the Adjusted Cost of Capital Assumes

Question 39

Multiple Choice

The Miles-Ezzell formula for the adjusted cost of capital assumes that


A) the firm rebalances its debt ratio only once per year.
B) the project cash flow is a perpetuity.
C) the project's risk is a carbon copy of the firm's risk.
D) MM's Proposition I corrected for taxes holds .

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