First blank: will offset, are added to

MM without taxes: (in millions) $71.5, $137.8, $101.4, $65.0

MM with corporate taxes: ( in millions) $137.8, $105.82, $59.5, $71.5

Miller with corporate and personal taxes: (in millions) $71.5, $88.507, $67.493, $137.8

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 toxesi: When personal taxes are included in the MM model, the taxes that stockholders pay on their bond and equity income the benefit created by the tax savings on corporate debt. Alumiscape Corporation has no debt, and a value of $65.000 million. Metallica Metals is atherwise identical but has $26.000million of debt in its capital structure. Under the different models, What is the value of Metalica Motals if its corporate tax rate is 25%, the porsonal tax rate on equity is 12\%, and the personal tax rate on debt is 27\%6? (Note: Do not round intermediate calculations.) Consider the following information: Adding personal taxes to the model lowers, but does not eliminate, the benefit from corporate dobt. In the United States, taxes on. capital gains ore lower than on ordinary income and can be deferred. The effective rate on stock income is normally lass than that on bond income, and although the personal tax an debt will lower the gain from corporate debt, it is not usually enough to elliminate it. Therefore, there is still a gain from leverage using Millar's model, as well as the MM model with corporate tax. Is the preceding information correct? Yes No