Describe the validity of the modigliani and miller model, Corporate Finance

Assignment Help:

Theoretically Modigliani and Miller (1958) took a fairly straightforward view of the purpose of a company in an economy. They pointed out that companies take cash from providers of long-term funds, invest it in new projects with positive Net Present Value (NPV) and repay the future net inflows to these fund providers in the form of dividend plus interest. They showed that there is no relationship between debt and the value of the firm and it seems to be good enough in the light of the assumptions underlying their model. However, most of these assumptions are unrealistic and untenable.

Required:

Describe the validity of the Modigliani and Miller model in the real world along with their assumptions.


Related Discussions:- Describe the validity of the modigliani and miller model

Merger and aquisition, It is given that company A will acquire company B wi...

It is given that company A will acquire company B with shares of common stock. Present earnings of A is rs. 20 million and of company B is rs. 5 million. Earning price per share of

Activity quota, A minimum level of sales-oriented activities that must be m...

A minimum level of sales-oriented activities that must be meet up by a salesperson in the given time period. An activity quota may need a salesperson to create a certain number of

Cost accounting, As What is the major value of the weighted cost of capital...

As What is the major value of the weighted cost of capital calculation for the firm?k question #Minimum 100 words accepted#

Analytical derivation of the capital asset pricing model, Question: a) ...

Question: a) Give an analytical derivation of the Capital Asset Pricing Model (CAPM) and supplement your analysis with diagrammatic illustrations where appropriate. b) The

Case study for corporate finance, ABAN LOYD CHILES OFFSHORE LTD. ...

ABAN LOYD CHILES OFFSHORE LTD. Normal 0 false false false EN-US X-NONE X-NONE MicrosoftInternetExplorer4

Mr, PROBLEM 1 A friend of yours, employed as a Tier 2 field service repres...

PROBLEM 1 A friend of yours, employed as a Tier 2 field service representative for a telephony corporation, wants your help as a financial specialist to determine the financial co

Calculate the optimum profit, XYZ plc has a Visitor Centre based in Perth. ...

XYZ plc has a Visitor Centre based in Perth.  The Centre houses exhibitions and educational resources to be used by schools, colleges and visitors.  It is a popular facility due to

Financial modelling, Financial Modelling Read carefully the case notes ...

Financial Modelling Read carefully the case notes overleaf. Factor models on explaining firm's returns in a credit risk context. Is the usual one-factor model good enough?

Finance Project, You have just graduated from Stanford''s MBA program and h...

You have just graduated from Stanford''s MBA program and have secured a position as a fund manager for a well known investment banking house. You have been given $300 million to m

Project on corporate finance, develop a corporate finance project and diss...

develop a corporate finance project and dissices all ground of financials areas

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd