MM Showed That in a World with Taxes, a Firm's

question 16

True/False

MM showed that in a world with taxes, a firm's optimal capital structure would be almost 100% debt.

---

Definitions:

Inheritance

Assets received from someone who has passed away, often subject to specific laws and taxes.

Fair Market Value

The price at which an asset would sell in the marketplace between a willing buyer and seller, each having reasonable knowledge of all relevant facts.

Long-Term Gain

Profit from the sale of an asset held for more than a specific period, typically one year, qualifying for preferential tax treatment.

Parcel of Land

A specific piece of land, defined by boundaries, that can be owned or bought.