Scenario studies of a MM standard theory’s theorem

The paper presents the results of the following research: how under different scenarios of the financial market and various models of financial risk the components of the weighted average capital cost change their values and meanings in order to follow MM theory postulates; how can the rather complicated problems of financial management be explained and analytically examined applying some basic linear (nonlinear) functions of one variable; how the MM theory is seen by the majority of companies operating at the Russian financial market. Fulfilled analytical studies provided for a new author’s amendment to the classic principle of MM theory: the value of the weighted average cost of capital does not depend on the financial leverage risk model.

MM theory, classical postulates, the weighted average cost of capital, financial risk models, scenarios of taxation, risk premium, capital structure, elemental prices, efficient market, analytical transformations