M&M Proposition I with taxes is based on the concept that:

a. The optimal capital structure is the one that is totally financed with equity.
b. The capital structure of a firm does not matter because investors can use homemade leverage.
c. A firm's WACC is unaffected by a change in the firm's capital structure.
d. The value of a firm increases as the firm's debt increases because of the interest tax shield.
e. The cost of equity increases as the debt-equity ratio of a firm increases.