1-Modigliani and Miller assuming perfect capital markets (no taxes) concluded:

a-the value of a levered firm will equal the value of an unlevered firm.

b-the value of a firm is dependent on the operating cash flows generated by business assets.

c-the value of a levered firm will always be greater than the value of an unlevered firm as debt has a lower cost than equity.

d-Both A and B.

2- Modigliani and Miller (with corporate taxes) concluded:

a- that a unlevered firm will always have a higher value than a levered firm

b- a company will be indifferent between the use of debt or equity.

c- a levered firm will always have a higher value than an unlevered firm due to the interest tax deduction.

d- Both A and B.