Which statement below best summarizes Modigliani and Miller Proposition One?
A firm's value depends on its net operating profits over time and the discount rate used to calculate the present value of those profits and not on the mix of debt and equity that the firm uses to finance its operations.
A firm's weighted average cost of capital remains constant no matter what mix of debt and equity it uses to finance its operations.
A firm's optimal capital structure occurs where the marginal costs of debt equal the marginal benefits of debt.
A firm's cost of equity rises the more money that it borrows.