2. M&M and Miller models As Aa After Modigliani and Miller's (MM) original no-tax theory, they went on to develop another theory that included corporate taxes. Subsequently, Miller developed another theory that included the effects of both corporate and personal taxes. Complete the following sentence based on your understanding of the MM Model with Corporate Taxes: MM's model that included the existence of corporate taxes concluded that debt is the best way to capitalize a firm. Alumiscape Corp. has no debt, and its value is s50.000 million. Metallica Metals is otherwise identical but levered with $220.000 million in debt. Under the different models, what is the value of Metallica Metals if its corporate tax rate is 29%, the personal tax rate on equity is 12%, and the personal tax rate on debt is 25%? Metallica Metals Value (Millions of dollars) Model MM without tax MM with corporate taxes Miller with corporate and personal taxes Consider the following information: Adding personal taxes to the model lowers, but does not elminate, the benefit from corporate debt. In the United States, taxes on capital gains are lower than on ordinary income and can be deferred. The effective rate on stock income is normally less than that on bond income, and although the personal tax on debt will lower the gain from corporate debt, it is not usually enough to eliminate it. Therefore, there is still a gain from leverage using Millers model, as well as the MM model with corporate tax Is the preceding information correct? O No O Yes