FIN 401 - Modigliani-Miller (M&M) Proposition 1 and 2 (no tax)

FIN 401 - Modigliani-Miller (M&M) Proposition 1 and 2 (no tax) - Part 1

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AllThingsMathematics

6 жыл бұрын

www.FIN401.ca

Пікірлер: 120

@AllThingsMathematics 6 жыл бұрын

Hey everyone, check out my website www.FIN401.com to see more of my videos on Capital Structure.

@user-wt5nh8zn2b 3 жыл бұрын

how can show that the share price is constant when the firm repurchanging shares( no taxes)?

@amoszahir7346 2 жыл бұрын

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@westleyleonardo1473 2 жыл бұрын

@Amos Zahir instablaster =)

@amoszahir7346 2 жыл бұрын

@Westley Leonardo I really appreciate your reply. I found the site on google and I'm trying it out atm. Looks like it's gonna take quite some time so I will get back to you later with my results.

@amoszahir7346 2 жыл бұрын

@Westley Leonardo it worked and I now got access to my account again. I'm so happy:D Thank you so much you saved my account :D

@missmokkori5558 4 жыл бұрын

This guy has literally saved my semester 🙏

@Manuel-gk3rv 2 жыл бұрын

This series about M&M is literally the main reason I passed my exam today. Thank you so much man!

@dakshan 5 жыл бұрын

I passed my finance final thanks to you! You're the man! Thank you so much Patrick

@mudassarhossain8956 Жыл бұрын

What are you studying

@African507 5 ай бұрын

You're the best Patrick! Thank you so much for posting these videos, they are lifesavers!!

@andrewday5063 2 жыл бұрын

Thank you for the excellent explanation of this concept! I'm watching all your videos on finance now.

@hyong-qc3ss 6 жыл бұрын

you sir, have an awesome way of explaining your class!!!

@nerminmohamed9846 2 жыл бұрын

You are an amazing professor ... really .. simple and valued

@l.h.7262 Жыл бұрын

just discovered your videos. I am learning more with you than my professor!! Thank you!

@saltywater6258 2 жыл бұрын

Why don’t teachers explain things like this gentleman, believe you deserve to teach in top universities not in KZfaq, thumps up and sub

@saajidahtajuddin2635 4 жыл бұрын

I have an online exam since uni is shut down due to the virus. rewatching the lecture podcast didn't do much help to me so THANK YOU SIR your videos help a lot

@kgh2015 6 жыл бұрын

Thank you so much for these videos. All of your videos are great!

@ponisaseaside3456 5 жыл бұрын

omg Patrick! Thank you so much !! you've literally saved my life!

@hanakawatin7549 2 жыл бұрын

Clear message, clear structure, easy to understand, thank you

@lyndaromana4784 5 жыл бұрын

Saved me for my exam I was doomed to fail!! Haha thanks man

@enea5956 6 жыл бұрын

this videos are well done, everything is clear. great job.

@Peach-ui3dy 2 жыл бұрын

If I pass the midterm Finance exam, it's because of you Hahaha Thank you so much!

@gracelee1381 5 жыл бұрын

Perfect explanation! Thank you so much!!!

@jeffreyzheng2010 4 жыл бұрын

crystal clear explanations. thanks, Sir!

@appygao8673 6 жыл бұрын

Great, your explanation rocks!

@tillypan8336 6 жыл бұрын

thank you so much for your teaching.

@heathercandido5776 5 жыл бұрын

seriously helping me pass my MBA corporate Finance class!!! Thank you so much!

@AllThingsMathematics 5 жыл бұрын

No worries :))

@carolinegauthier 4 жыл бұрын

same :)

@nicos.1200 3 жыл бұрын

Great video, great explanations. Thanks

@martin-georgiev 5 жыл бұрын

Thanks bro for the lecture. Much appreciated!

@danisumawijaya7634 4 жыл бұрын

this guy explains it better than my professor who is a CFA

@diegocaizatoabenavidestran8142 4 жыл бұрын

Greetings from Chile! U helped me a lot!

@tongtongli4141 6 жыл бұрын

Thank you for doing this!

@colinchan790 5 жыл бұрын

Great explanation, thank you!!!

@rachelmin0105 7 ай бұрын

this is so clear, thank you!

@mrsyk93 6 жыл бұрын

You saved my life

@marianavargas6660 4 жыл бұрын

This helped so much! Thank you!!!!!!!

@mindstorm1998 4 жыл бұрын

Bro you came in clutch!

@zoeynotzoeh8036 4 жыл бұрын

man!! you are soo good. It's really helpful thxxxx

@aklimakanzhigit790 6 жыл бұрын

Thank you so much for the video!

@micheallook9189 6 жыл бұрын

Thanks a lot for this helpful video!

@stanley690925 6 жыл бұрын

Awesome video. Thank you

@hihohiho9455 5 жыл бұрын

Well explained. Thank you!

@huseyinkamilgezginci791 5 жыл бұрын

Thx, saved my back!!

@donif.6193 4 жыл бұрын

Damn Bro, that's too good.

@mohammedsanisuleiman6159 3 жыл бұрын

You are excellent Patrick...

@AllThingsMathematics 3 жыл бұрын

Thank you :)

@bhubesinyama874 6 жыл бұрын

Well explained, thanks man

@meymunaali7850 4 жыл бұрын

What a great Vedio.thank you so much

@juliakapiska6673 4 жыл бұрын

very good explanation :)

@masoudnoordeh4276 Жыл бұрын

Great job,thanks.

@yuliabogdanovych517 4 жыл бұрын

Thank you sooo much!!!

@amarbaperchannel 2 жыл бұрын

Thanks Sir🥰 from India

@mandarin408 6 жыл бұрын

Nice! Thank you.

@nickno2980 2 ай бұрын

Thank you so much :)

@franco8019 2 жыл бұрын

Awesome sur tomorrow i have exam i hope i may to manage with such kind of question in exam if i'll face with them :)

@florisvanderveen2777 6 жыл бұрын

AWESOME!!

@gracecalubaquib8173 3 жыл бұрын

very well explained thanks!

@AllThingsMathematics 3 жыл бұрын

You're welcome!

@Anglepaat 5 жыл бұрын

Good Afternoon sir, but does the assumption that share prices is constant only apply if the debt does not have an interest payment?

@KENZOkm 6 жыл бұрын

So does the company own the 20,000 shares and the other 30,000 are public?

@amnasarosh5611 4 жыл бұрын

Can u please tell me what are your video settings on ur dslr camera

@mustafarizvi3834 3 жыл бұрын

Many thanks, Brother ...

@AllThingsMathematics 3 жыл бұрын

you're welcome :)

@monikasuryawanshi7897 6 жыл бұрын

Good job

@selamawitchanie5830 4 жыл бұрын

Good expression God bless u

@rajs2050 5 жыл бұрын

Thank you!!!!!!!!!!!!!!!!!!!!!!!!

@HuongNguyen-vc5lf 4 жыл бұрын

If you borrow debt to repurchase shares and the debt has an interest, how it is gonna change the debt and equity? total debts =($120000+ interest), and Equity= Total assets - total debts. Is that correct?

@thanhvannguyen9727 6 ай бұрын

Thanks mate

@nwanneelizabeth8039 2 жыл бұрын

Simple explanation

@vishuraja25 6 жыл бұрын

What about the interest payments that arise with debt? Where do they go in balance sheet and don't they affect the market value of the company?

@AllThingsMathematics 6 жыл бұрын

Hi Raja, couple of things: 1) interest payments go on the income statement, not the balance sheet 2) interest payments affect the value of a company when there are taxes, because they are tax deductible and reduce taxes to be paid (or increase tax shield). If you see my videos on M&M (with taxes), I go into more detail on this.

@sharonarandia3630 3 жыл бұрын

Niiiiiice video

@AllThingsMathematics 3 жыл бұрын

thanks :)

@benjaminkjaerhansen4733 8 ай бұрын

does homemade leverage work when there is no tax

@Humble_African 3 жыл бұрын

God sent!

@ary__land9510 3 жыл бұрын

Please how did you get the $6?

@naveenverma8470 5 жыл бұрын

Sir what is assumption of this

@OlgaBergInternational 8 ай бұрын

I do not understand why we are dividing 300 000 by 50 000. These are outstanding shares, we do not know how many shares within 300 000, correct?

@yashshah4307 Жыл бұрын

🐐💪🏾

@themazmagmon 5 жыл бұрын

nice, nice, nice

@weightycarlos 2 жыл бұрын

I can't believe I'm going to report this...

@chenchiq8073 3 жыл бұрын

this guy is a god

@AllThingsMathematics 3 жыл бұрын

Thanks!

@abuhanifkhan1670 Жыл бұрын

Pls give a video on Deferred Tax

@yefaobeng4936 4 жыл бұрын

Interesting topic although I’ve few doubts: 1- The repurchase of shares comes when there are shares out in the market and from the example this is not shown. 2- A part from this the demonstration looks wired: if I take on debt I will have more cash in my assets taking the 300K up to 420K. My equity will remain the same 300K (no dilution or accretion is fine) and debt will increase to 120K. The value of the company will stay the same because EV = Equity + Net debt so 300 + ( 120 - 120 ). Does it sound fair??

@aieshijain 4 жыл бұрын

1. The repurchase is happening because there are 50,000 shares outstanding in the market. Shares are being repurchased from these. 2. It does rise from 300K to 420K. However, the very rule of MM1 (without taxes) is that the value of the firm remains constant when it becomes levered from being unlevered. Vu = VL. Hence, the 120K rise in firm value due to the debt is actually compensated by the fall in equity value so that the overall asset value stays constant. Hope this helps!

@yefaobeng4936 4 жыл бұрын

@@aieshijain Thank you for the reply. First of all mine it's just a shared though. 1. Good to know about the shares because this was not stated. 2. I completely agree with you as well as the MM1 theorem: I believe the first assumption of MM is met since the value of the firm does not change and this is not because the value of the equity decreases unless the company is in a distress situation. Hence 420 on the asset side and the 300 + 120 on the Equity & Liability still holds since the value of the firm will be EV = Equity + Net debt so that 300 + ( 120 - 120 ) = 300. Here it comes the second theorem of MM that states that the debt is increasing the risk of the Equity holders so what the change will be the return on equity and not the value of the Equity per se. Moreover, the increase in debt is not having a dilutive effect on Equity, in this case if the value of equity decreases and the shares + the 50 new will create a dilution effect. Do you agree on that?

@maricelagutierrez816 2 жыл бұрын

@@aieshijain I was confused too still am but just a lil. Thanks

@ninabrdh8625 4 жыл бұрын

😍😍

@ravindranpillai5155 3 жыл бұрын

U look cool for a finance guy...😀

@eng.abdulrahmanalotaibi2397 Жыл бұрын

you are smart

@amnhaclanguonsong5476 5 жыл бұрын

Great

@sidraqayyum230 3 жыл бұрын

Thanks

@lucasmoratoaraujo8433 2 жыл бұрын

This guy seems like he is about to cover some eminem, and, come to think about it, he does.

@shewanesgetiye5592 2 жыл бұрын

nice presentation but please Mr. when you doing videos please put part by part or simply say part 1, part2 ........................

@lloloa9706 5 жыл бұрын

I honestly want to know why those stupid so called professors don’t know how to explain things????not just that they confuse you and make it harder... i have a professor 🤓 who says you add this by this add this by that !! What the hell is this and that seriously!!!anyway you are 100000 better than my professor thank you

@batatambor 6 жыл бұрын

I dont quite understand how you are relating Assets' book value to company's value, since company value is related to discounted cashflows and assets' value is related to accounting value at the balance sheet. That said equity book value for a 100% equity firm doesn't translate the market value of the firm. In the exemple you gave, if a company borrows 120 of debt to buyback shares, in the balance sheet you will have equity book value (that does not necessarily match up equity market value) and debt book value (that actually match up current share's market value). How are we supposed to deal with that?

@AllThingsMathematics 6 жыл бұрын

Hi Ricardo, that's a good and fair question. I'm assuming that all values on the "balance sheets" in the video are Market Value. Yes, balance sheets are usually based on book value, but think of these as like "market value balance sheets". So the Assets, Debt and Equity are always based on market value. I could've mentioned that in the video to clarify. Thanks for bringing it to my attention.

@batatambor 5 жыл бұрын

Thank you for replying

@emmanuelasantesaforo8084 5 жыл бұрын

@@batatambor Good info ... thanks this have really help

@user-ot5lk6mj5n 7 ай бұрын

If you give me the material

@yejin5315 4 жыл бұрын

How come you said market value = company asset value ??? Asset value should be equals to book value.

@asinicalnarcissist9520 3 жыл бұрын

imma fail my unit this is hard as fk

@mishadaro9759 3 жыл бұрын

I didn't understand why assets are still 300k after borrowing money. Let's suppose I have 5 bucks and I borrow another 5 bucks. That means I have 10 bucks, so my assets are 10 bucks. Isn't this how money works?