The Modigliani-Miller model of capital structure begins with the simple assumption that the investing decision and financing decision of a firm are inseparable.

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The Modigliani-Miller model actually begins with the assumption that the investing decision and financing decision of a firm are separate, known as the separation principle. This allows the model to analyze the impact of capital structure on a firm's value independently of its investment decisions.

The Modigliani-Miller Model of Capital Structure Begins with the Simple