16. MM Proposition 2 (S16-3) Imagine a firm that is expected to produce a level stream of...
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16. MM Proposition 2 (S16-3) Imagine a firm that is expected to produce a level stream of operating profits. As leverage is increased, what happens to
a. The ratio of the market value of the equity to income after interest?
b. The ratio of the market value of the firm to income before interest if (i) MM are right and
(ii) the traditionalists are right?
482 Part Five Payout Policy and Capital Structure
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Related Book For 
Principles Of Corporate Finance
ISBN: 9781264080946
14th Edition
Authors: Richard Brealey, Stewart Myers, Franklin Allen, Alex Edmans
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