Talk:Modigliani-Miller theorem

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[edit] Dates

I've added the dates to the titles of the theorems to make searching for the relevant information easier and more clear.

I suggest changing B to D and S to E (same for when used as subscripts), which is in my opinion more often notation

[edit] Derivation should be added

Yes, we can see the formula in the article. However, readers don't know the reason why and how formula is derived. Please add some information on the derivations. Jackzhp 21:21, 11 October 2006 (UTC)


[edit] Formula may be incorrect

I've seen the formulation provided here to calculate required return on equity for MM Prop II, but have determined that it incorrectly represents the derivation. The correct derivation would be:

rCE = rW + D/E[rW - rD(1-t)]

Recall that the second proposition states that the cost of equity is a linear function of the debt-to-equity ratio. The current formulation in this paper provides the perverse (and incorrect) result of DECREASING required return on equity, if WACC is kept the same and the calculations are completed with t=0 and t>0. Insiderman1 16:57, 19 February 2007 (UTC)

[edit] Merge

I think Capital structure irrelevance principle should be merged into this page as it is referring to exactly the same thing. Suicup 10:24, 6 June 2007 (UTC)

I agree. They are referring to the same thing. And precisely which principle is being referred to is more clearly recognized when it is called the Modigliani-Miller theorem than when it is given a more descriptive but less distinctive name. --Rinconsoleao 10:36, 2 July 2007 (UTC)

[edit] Problem with Graph

For this graph Image:MM2.png

the k's aren't described so it's hard for the reader to know how it relates to the section it's in. Pocopocopocopoco (talk) 04:15, 13 April 2008 (UTC)