Define market value in modigliani miller equation, Financial Management

Define in the Modigliani-Miller equation (MM equation), why is the market value of the levered firm greater as compared to the market value of an equivalent unlevered firm?

The levered firm has a greater market value since less money is taken from the firm by the government in taxes because of tax-deductible interest payments.  So, there is more cash left for investor groups as compared to when the firm is financed along with all-equity funds.

Posted Date: 5/11/2013 1:26:52 AM | Location : United States







Related Discussions:- Define market value in modigliani miller equation, Assignment Help, Ask Question on Define market value in modigliani miller equation, Get Answer, Expert's Help, Define market value in modigliani miller equation Discussions

Write discussion on Define market value in modigliani miller equation
Your posts are moderated
Related Questions
Along with the fixed capital nearly every Small-Scale industries requires working capital though the extent of working capital requirement differs in different businesses. Working

Compare and contrast the potential liability of owners of proprietorships, partnerships (general partners), and corporations. The sole proprietor has infinite liability for mat


applicability of operating cycle in poultry

The key parameters taken into account while rating a debt instrument are as follows: 1. Industry Evaluation - This involves an evaluation of the

How do financial managers calculate the average tax rate? Average tax rates are computed by dividing tax dollars paid by earnings before taxes (EBT).

What is trustworthy collateral from the lenders' perspective?Explain whether accounts receivable and inventory are trustworthy collateral. Assets that are readily marketable of

Company capacity to continue trading Given the preceding discussion it is unlikely that the business can continue in its current form. The trading performance is clearly very

ABC Ltd. Produces electronic components with a selling price per of Rs.100. Fixed cost amount to Rs.2,00,000/- 5000 units are produced and sold each year. Annual profits amount to

Collateralized Mortgage Obligations (CMOs) CMOs retain many of the yield and credit quality advantages of pass-throughs, while eliminating some of the