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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The detailed answer for the above question is provided below TRUE Explanation When there are ... View the full answer