Lecture

Modigliani/Miller Theorem: Capital Structure and Firm Value

Description

This lecture explores the Modigliani/Miller Theorem, which states that in a perfect capital market, a firm's value is independent of its capital structure. The theorem is proven by assuming no taxes, no contracting costs, and a fixed investment policy. The implications of leverage on firm value, tax shields, and the relationship between risk and return are discussed. The lecture also covers the effects of leverage on earnings per share, the cost of capital, and the wealth of shareholders.

Official source

About this result

This page is automatically generated and may contain information that is not correct, complete, up-to-date, or relevant to your search query. The same applies to every other page on this website. Please make sure to verify the information with EPFL's official sources.

Graph Chatbot

Chat with Graph Search

Ask any question about EPFL courses, lectures, exercises, research, news, etc. or try the example questions below.

DISCLAIMER: The Graph Chatbot is not programmed to provide explicit or categorical answers to your questions. Rather, it transforms your questions into API requests that are distributed across the various IT services officially administered by EPFL. Its purpose is solely to collect and recommend relevant references to content that you can explore to help you answer your questions.