Modigliani and Miller: A Challenge to Capital Budgeting StrategiesFinancing corporate purchases and overall capital budgeting usually requires the finance manager to assess tax rates dividend payout policy weighting of capital sources and more. However the Modigliani and Miller propositions state that in most situations it does not matter if the firm’s capital is raised by issuing stock or selling debt. As a student you might assume studies of capital budgeting strategies will no longer be reviewed in coursework. Before coming to that conclusion please discuss the principles presented by Modigliani and Miller and explain your agreement or disagreement.
