Economic Paper

American Economic Association

The Cost of Capital, Corporation Finance and the Theory of Investment Author(s): Franco Modigliani and Merton H. Miller Source: The American Economic Review, Vol. 48, No. 3 (Jun., 1958), pp. 261-297 Published by: American Economic Association Stable URL: http://www.jstor.org/stable/1809766 Accessed: 10/09/2009 09:51
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The

American

economic
JUNE 1958

Revlew
NUMBER THREE

VOLUME XLVIII

THE COST OF CAPITAL, CORPORATION FINANCE AND THE THEORY OF INVESTMIENT
By
FRANCO MODIGLIAN1 AND MERTON H. MILLER*

What is the "cost of capital" to a firm in a world in which funds are used to acquire assets whose yields are uncertain; and in which capital can be

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