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Modigliani and Miller assumed that firms pay out all of their earnings as dividends, Therefore, they theorized that firms do not grow, Firms do grow,

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Modigliani and Miller assumed that firms pay out all of their earnings as dividends, Therefore, they theorized that firms do not grow, Firms do grow, 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 extension for growth is true or false

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