Question

A major contribution of the Miller model is that it demonstrates, other things held constant, that ____

(A) debt costs increase with financial leverage.
(B) personal taxes lower the value of using corporate debt.
(C) financial distress and agency costs reduce the value of using corporate debt. d. personal taxes have no effect on the value of using corporate debt.
(D) personal taxes increase the value of using corporate debt.

Answer 1

Answer: The correct answer is "personal taxes lower the value of using corporate debt".

Explanation: A major contribution of the Miller model is that it demonstrates, other things held constant, that: personal taxes lower the value of using corporate debt.