1. explain the Miller Modigliani Proposition II without taxes without taxes in relation to Cost of Equity (Re) and Weighted Average Cost of Capital (WACC).
2. the Illustrate using levered firm the Miller Modigliani Proposition II with taxes in terms of cashflow from assets or value of the firms. Discuss the proposition in relation to Re and WACC.
3. explain the Miller Modigliani Proposition with taxes in relation to Bankruptcy Costs. (Hint: Explain by relating to Cost of Equity (Re), Weighted Average Cost of Capital (WACC) and value of firm.

M+ M Prop II - Case ) - No taxes any bankruptcy costs Ex. Smith Company WACL = 15 5. New Target E= 505 D = 505 RD DidTarget D : 305