In a world with taxes, M&M’s second proposition defines the expected r
In a world with taxes, M&M’s second proposition defines the expected return on equity as:
A) Ke = Ku + (Ku – Kd) (1 – t) ( )
B) Ke = Ku + (Ku + Kd) (1 – t) ( )
C) Ke = Ku + (Ku – Kd) (1 + t) ( )
D) Ke = Ku – (Ku – Kd) (1 – t) ( )
ANSWER
A
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