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In the context of the M&M Irrelevance theorem, in a world with no taxes and no bankruptcy costs,

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In the context of the M&M Irrelevance theorem, in a world with no taxes and no bankruptcy costs,

In the context of the M&M Irrelevance theorem, in a world with no taxes and no bankruptcy costs,

▸ the firm should borrow to the point where the marginal benefits of debt equal the marginal costs.

▸ the firm should maximize the value of the firm by maximizing the firm's debt.

▸ the firm's value is unaffected by capital structure.

▸ the firm cannot make a decision about the optimal capital structure with the existing information.

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Corporate Finance

Edition: 5^th

Author: Booth

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