The Nobel Prize winning Modigliani & Miller Theory states that a firms capital structure does not matter.
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The Nobel Prize winning Modigliani & Miller Theory states that a firm’s capital structure does not matter. It is based on three key assumptions: No income taxes Equal borrowing cost- individuals can borrow at the same interest rate as corporations. Perfect markets: There are no bankruptcy, transaction, contracting, or agency costs. Are these assumptions reasonable? What are the implications if the assumptions do not hold?
Related Book For
International Business The Challenges of Globalization
ISBN: 978-0133866247
8th edition
Authors: John Wild, Kenneth Wild
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