Modigliani and Miller Proposition 2 (with tax)

This topic has 1 reply, 2 voices, and was last updated 8 years ago by John Moffat.

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December 5, 2017 at 6:45 pm #420779
rafayazhar
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Please tell me when should I use this formula?
What indication in the question should I look for in order to confirm the use of this?
December 5, 2017 at 9:39 pm #420816
John Moffat
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The formula is rarely relevant in the exam. Usually you are given betas in which case this formula is not needed.
It is only needed when you are not given betas but need to calculate what the cost of equity will be with or without gearing.
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