Question
In a world with no taxes, Modigliani and Miller (MM) show that a firms capital structure does not affect its value. However, when taxes are
In a world with no taxes, Modigliani and Miller (MM) show that a firm’s capital structure does not affect its value. However, when taxes are considered, MM show a positive relationship between debt and value, i.e., the firm’s value rises as its uses more and more debt, other things constant.
a. True
b. False
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Fundamentals of Financial Management
Authors: Eugene F. Brigham, Joel F. Houston
Concise 6th Edition
324664559, 978-0324664553
