$($a$)$ State Modigliani and Miller's proposition I $($MMI$)$ of capital structure decision in the

absence of taxes. How would their proposition change in the presence of corporate taxes?

$($b$)$ What does the trade$-$off theory say about the corporations' debt financing position? Explain

how the theory modifies the position of Modigliani and Miller with corporate taxes in part$($a$)$