CFA Level 2 | Corporate Finance: Modigliani-Miller Proposition 1 & 2 (With Taxes)

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4 жыл бұрын

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CFA Level 2
Topic: Corporate Finance
Reading: Capital Structure
In this video, we cover Modigliani-Miller's Proposition I and II, with taxes. We then cover an example to calculate:
1) the value of the unlevered firm,
2) the value of the levered firm,
3) the equity value,
4) the cost of equity,
5) WACC
Visit www.noesis.edu.sg for more info on CFA course prep in Malaysia, Singapore, and Vietnam.
#CFA #CFALevel2 #CorporateFinance #CapitalStructure #ModiglianiMiller #CFAMalaysia #CFASingapore #CFAVietnam #CFAIndonesia #CFAInstitute #CFAExam

Пікірлер: 14

@datnguyenhuu5547 3 жыл бұрын

Have a good day Fabian. I just come here to thank you. Thank you so much with so many useful videos guild line on CFA level II exam. I just have passed the May exam. 80% my basic knowledge for the exam is gained from your videos. Thanks again!

@FabianMoa 3 жыл бұрын

Congratulations on your result, Dat! I also post on Level 3 videos, hopefully it will help you out as well. Cheers!

@richardgordon 4 жыл бұрын

Thanks Fabian! Really well explained. I've been studying up on Modigliani-Miller and you put meat on the bones and it's been very helpful for me to understand what's going on.

@FabianMoa 4 жыл бұрын

That's great, Richard. Always glad that someone finds my videos beneficial.

@vlazyboi8084 3 жыл бұрын

Life saver video. Thanks a lot!

@FabianMoa 3 жыл бұрын

You're welcome!

@wuu-onderful_fwwq 2 жыл бұрын

Hello Fabian, I'm studying for Exam IFM and this video is very helpful!! I am also wondering if you possibly have a video about applying MM Proposition to firms planning to repurchase their stocks by issuing debts. Thank you so much!

@FabianMoa 2 жыл бұрын

Hi Wanqian, for the case you mentioned, you can incorporate the following: D = existing debt + debt issued to repurchase shares E = existing equity - value of share repurchase Int = D × cost of debt

@Nanagotravel 2 жыл бұрын

Hi tutor For the last example, is the VL=EBIT(1-i)/WACC ? then I calculate the EBIT [360,000 - (1m x 5%) ] But why you just calculate EBT: 360,000 only? Thx~

@FabianMoa 2 жыл бұрын

EBIT is before interest, so it is just 360,000 EBT is after interest, which is 360,000 - 1,000,000*5%

@Nanagotravel 2 жыл бұрын

@@FabianMoa ok, it’s different items but using the same amount, I look it wrongly. By the way, my text book say M&M did do further work on the effect of personal taxation, have any your video explain about it?

@beomkomap 2 жыл бұрын

Hi. Why Ro = WACC = 12% then we still need to find WACC and WACC = 11.0769%, not 12%?

@FabianMoa 2 жыл бұрын

Wacc = 12% only when company is 100% equity funded. If debt is used then the company is no longer 100% equity funded so you have to recalculate the cost of equity, re and the Wacc based on the new capital structure

@beomkomap 2 жыл бұрын

@@FabianMoa tks sir. Im clear now.