Consider the Modigliani and Miller (M&M) tradeoff theory of…
Consider the Modigliani and Miller (M&M) tradeoff theory of capital structure. Assume there are taxes and bankruptcy costs. Which of the following statements is / are correct? I. Firm value always increases as more debt is addedII. Firm value stays constant as more debt is addedIII. WACC always decreases as more debt is addedIV. WACC always increases as more debt is addedV. WACC stays constant as more debt is added