The Major Contribution of the Miller Model Is That It

question 48

Multiple Choice

The major contribution of the Miller model is that it demonstrates that

• A) personal taxes decrease the value of using corporate debt.
• B) financial distress and agency costs reduce the value of using corporate debt.
• C) equity costs increase with financial leverage.
• D) debt costs increase with financial leverage.
• E) personal taxes increase the value of using corporate debt.

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Definitions:

Act of God

An event caused by natural forces beyond human control, such as earthquakes, floods, or hurricanes, that is not the fault of any individual.

Unconditionally Appropriated

refers to funds or assets that have been allocated without any conditions or restrictions for their use.

Common Carrier

A transportation business that specializes in the transport of goods.

Title

A legal term referring to the rightful ownership of property, including the rights to use, sell, or lease it.