The Miller model begins with the MM model without corporate taxes and then adds personal taxes.

Question

Quizplus · Accepted Answer

The Miller model extends the Modigliani-Miller theorem by incorporating both corporate and personal taxes, not by starting without corporate taxes and then adding personal taxes. The original MM model assumes no taxes, and then the Miller model considers the effects of both types of taxes on capital structure.

The Miller Model Begins with the MM Model Without Corporate