Asked by Jessica Biddle on Jul 02, 2024
The MM model is the same as the Miller model,but with zero corporate taxes.
MM Model
The Modigliani-Miller theorem, proposing that in perfect markets, the value of a firm is unaffected by its capital structure.
Miller Model
A model formulated by Merton Miller, part of the Modigliani-Miller theorem, which discusses the irrelevance of capital structure for a company's market value under certain assumptions.
Corporate Taxes
Taxes imposed on the income or profit of corporations, varying widely by country and affecting companies' net income.
- Appreciate the impact and ramifications of corporate and personal taxes on capital structure choices, in the context of the MM and Miller theories.
Learning Objectives
- Appreciate the impact and ramifications of corporate and personal taxes on capital structure choices, in the context of the MM and Miller theories.