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Can you please help me to see if I am correct? 1. MM extension with growth Modigliani and Miller assumed that firms pay out all
Can you please help me to see if I am correct?
1. MM extension with growth Modigliani and Miller assumed that firms pay out all of their earnings as dividends. Therefore, they theorized that firms do not grow. Firms do prow, however, and as capital structure theory advanced, an extension to the MM model with taxes was developed that incorporated growth. Indicate whether each of the following statements about the MM model and the extensycn for growth is true or false. The total value of the firm is independent of the amount of debt it uses. using the MM extension for growth, a growing firm's levered cost of equity is greater than the levered cost of equity under MM's original (with tax) assumptions. The tax shield should be discounted at the unlevered cost of equity. The MM model extended for growth includes a growing tax shield. True False O O O
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