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klasskru [66]
3 years ago
10

In a world with no taxes, MM show that a firm's capital structure does not affect the firm's value. However, when taxes are cons

idered, MM show a positive relationship between debt and value, i.e., its value rises as its debt is increased.A. TrueB. False
Business
1 answer:
faltersainse [42]3 years ago
3 0

Answer:

True

Explanation:

According to MM, without taxes, the market value of the company is not affected by capital structure. As a result, the WACC is unaffected by capital structure. Here, the value of a company is determined by cash flows.

In the case where there is tax, the value of a company with debt is greater than that of the same company without debt for the same level of income.

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Answer:

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