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 the way the firm finances its operations (i.e., through debt or equity) does not affect its overall value.

The Modigliani-Miller Proposition I Without Taxes States