The Modigliani-Miller Proposition I without taxes states:
A)a ﬁrm cannot change the total value of its outstanding securities by changing its capital structure
Proportions.
B)when new projects are added to the ﬁrm the ﬁrm value is the sum of the old value plus the new.
C)managers can make correct corporate decisions that will satisfy all shareholders if they select projects that
Maximize value.
D)the determination of value must consider the timing and risk of the cash ﬂows.
E)None of the above.

Question

Quizplus · Accepted Answer

The Modigliani-Miller Proposition I without taxes states that a firm cannot change the total value of its outstanding securities by changing its capital structure proportions. This means that regardless of how the firm finances its operations (via equity or debt), the overall value of the firm remains the same. Thus, choice A is the correct answer.

The Modigliani-Miller Proposition I Without Taxes States