1. Analyze and discuss the following proposition by Franco Modigilani and Merton Milles (MM): "... when there are no taxes and capital markets work well, the market value of a company does not depend on its capital structure. In other words, CFOs cannot increase value by changing the combination of securities used to finance the company ... ". Use hypothetical numerical examples to argue your contribution.
 
2. At the end of 2014, Croydon Corp. paid US $ 855 million for interest on the debt:
 
to. How much more would this corporation have paid in taxes if it were financed only with its own capital?
 

Answer rating: 100% (QA)

Answer when there are no taxes and capital markets work well the market value of a company does not depend on its capital structure this is the presum... View the full answer