The Modigliani-Miller Theorem is a foundational principle in corporate finance that asserts the value of a firm is unaffected by how it is financed, whether through equity or debt, in a perfect market. This theorem highlights the idea that capital structure does not influence a company's overall value, suggesting that the mix of debt and equity financing is irrelevant in terms of valuation, as long as markets are efficient and there are no taxes or bankruptcy costs.
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