Miller (1977) argues that the following three results would hold in a world with personal and corporate taxes but no bankruptcy costs:

i)capital structure is irrelevant for the firm;

ii)there is a unique debt/equity ratio for the aggregate corporate sector;

iii)investors partition themselves into clienteles since there is a unique relationship between the individual's marginal personal tax rate and his or her holdings of corporate securities.

Explain the Miller Model. Then, answer the following question:

How valid are the above results if firms face different corporate tax rates?