MM Proposition I with corporate taxes
MM Proposition I with corporate taxes is the equation VL = VU + TD. Thus, firm value increases with leverage and the optimal capital structure is virtually all debt.
Definitions
According to Financial Management Theory and Practice by Eugene F. Brigham and Michael C. Ehrhardt (13th edition),
- MM Proposition I with corporate taxes. VL = VU + TD. Thus, firm value increases with leverage and the optimal capital structure is virtually all debt.
Related concepts
- Financial management. A combination of enterprise efforts undertaken in order to procure and utilize monetary resources of the enterprise.
