Modigliani and Miller developed a theory describing a firm’s optimal capital structure, ranging from a basic model assuming no corporate taxes, to an intermediate model including corporate taxes, and ultimately a model providing for costs of financial distress.

Required

Requirement-A. Give examples of the type of practical companies where each of those three models would be applicable. Justify your answer. Only mention the type of companies for each model and justify. The explanation of the model is NOT required.

Requirement-B. How can a firm achieve the principal goal of financial management under each of these three models?

Answer rating: 100% (QA)

1 Bricks and Clicks Model A bricks and clicks business model or sometimes called clicks and bricks i... View the full answer