PPT Slide
Value of Firm, V (%)
4
3
2
1
0 0.5 1.0 1.5 2.0 2.5
Debt
(Millions of $)
VL
VU
MM relationship between value and debt when corporate taxes are considered.
Note: Under MM with corporate taxes, the firm’s value increases continuously as more and more debt is used.
TD
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