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Modigliani and Miller's first article led to the conclusion that capital structure is irrelevant because it has no effect on a firm's value. However, that
Modigliani and Miller's first article led to the conclusion that capital structure is "irrelevant" because it has no effect on a firm's value. However, that article was criticized because it assumed that no taxes existed. MM then revised their original article to include corporate taxes, and this model led to the conclusion that a firm's value would be maximized if it used (almost) 100% debt
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