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Q. Discuss MM theory propositions and its applications in valuations. (with examples )
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The paper helps in evaluating the discussion regarding the propositions as well as its applications in valuation. It is important to understand the different aspects of MM theory in a more defined way. The market value firm is effectively theorized and determined by its respective earning power having the risk of its respective underlying assets consisting of its value that is independent. On the other hand, the basic MM proposition is merely based on few of the crucial assumptions like No taxes, no transactions costs, no bankruptcy costs, no debt on the company etc. It has been seen that in the real world there exists taxes, transaction costs as well as many other factors that contribute towards the execution of the business processes of the particular firm throughout the concerned market areas.
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