Modigliani and Miller theory forms the theoretical foundation of corporate finance. Yet Modigliani and Miller theory was derived from a very special case of cash flows. Weighted Average Cost of Capital (WACC), which is part of the Modigliani and Miller theory, plays a fundamental role in capital structure decision and asset valuation. Empirically, asset valuation calculated from cash flows discounted by WACC almost always differs from the sum of debt and equity values. We derive asset valuations for more general cashflows. Only when the debt equity ratio is constant over time, valuation by WACC is equal to the sum of debt and equity values.

莫迪利亚尼和米勒理论构成了公司财务的理论基础。然而，莫迪利亚尼和米勒的理论源自现金流的一个非常特殊的案例。加权平均资本成本 (WACC) 是莫迪利亚尼和米勒理论的一部分，在资本结构决策和资产估值中起着基础性作用。根据经验，根据 WACC 贴现的现金流计算的资产估值几乎总是不同于债务和股权价值的总和。我们为更一般的现金流得出资产估值。只有当债务权益比率随时间保持不变时，WACC 的估值才等于债务和权益价值的总和。