*Overview of concepts: * Interest payments are tax deductible as an expense for the corp‚ debt financing creates valuable ITS for the firm. * Can include value of ITS in several ways: 1. WACC METHOD; discount unlevered free cash flows using the weighted average cost of capital (WACC). Because we calculate the WACC using the effective after-tax interest rate as the cost of debt‚ therefore this method incorporates the tax benefit of debt implicitly through the cost of capital.
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capital structure is called as the optimum capital structure. At the optimum capital structure‚ the weighted average cost of capital would be the minimum. The capital structure decision influences the value of the firm through its cost of capital and can affect the share of the earnings that pertain to the equity shareholders. Introduction to Capital Structure Theories There are 4 basic Capital Structure theories. They are: 1. Net Income Approach 2. Net Operating Income Approach 3. Modigliani-Miller
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assets. 3 Two concepts Equilibrium Equilibrium prices: those at which‚ on average‚ the number of buyers at that price equals the number of sellers. Arbitrage Two portfolios having identical cashflows (with identical risk) must have identical value. Otherwise one may arbitrage between them. CAPM is an equilibrium theory. Option valuation relies on arbitrage pricing theory. Construct a hedging portfolio with identical cashflows to the option. Arbitrage concept. Nick Webber‚ C++ modelling
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International Research Journal of Finance and Economics ISSN 1450-2887 Issue 7 (2007) © EuroJournals Publishing‚ Inc. 2007 http://www.eurojournals.com/finance.htm Empirical Evidence on Retail Firms’ Equity Valuation Models Anastasia Vardavaki 13 Epidavrou str.‚ Halandri‚ 152 33 Athens‚ Greece E-mail: anastasia_vardavaki@yahoo.gr John Mylonakis 10 Nikiforou str.‚ Glyfada‚ 166 75 Athens‚ Greece E-mail: imylonakis@panafonet.r Abstract This paper presents the theoretical framework for the process
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Basic Concepts in Attachment Theory Attachment theory is the joint work of John Bowlby and Mary Ainsworth (Ainsworth & Bowlby‚ 1991 ). Drawing on concepts from ethology‚ cybernetics‚ information processing‚ developmental psychology‚ and psychoanalysts‚ John Bowlby formulated the basic tenets of the theory. He thereby revolutionized our thinking about a child’s tie to the mother and its disruption through separation‚ deprivation‚ and bereavement. Mary Ainsworth’s innovative methodology not only
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Research Methodology: Introduction Basic Concepts: Research‚ Bus. Research; Methods and methodology; population and sample; census and sampling; variable and attribute; Operational definition; Data‚ information and knowledge; Research is a process of identifying the status of a phenomenon through deploying various methods in a systematic manner. Research is a systematic process of identifying the problems‚ defining the questions and objectives‚ identifying the variables/ indicators to address
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relate with one another. In layman’s language‚ communication emanates from the need to share ideas or information from one person to another by the use of symbols such as words‚ pictures‚ figures and graphs. Common Concepts about Communication Different authorities have common concepts about communication. Some of these are present hereunder. * Communication is a purposive activity which is prompted by need to express ideas‚ feelings‚ attitude and course of action to attain a predetermined goal
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2 Cost Terms‚ Concepts‚ and Classifications Learning Objectives LO1. Identify and give examples of each of the three basic manufacturing cost categories. LO2. Distinguish between product costs and period costs and give examples of each. LO3. Prepare an income statement including calculation of the cost of goods sold. LO4. Prepare a schedule of cost of goods manufactured. LO5. Understand the differences between variable costs and fixed costs
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and actions that determines the long-run performance of a corporation. Includes: Internal and external environment scanning Strategy formulation Strategy implementation Evaluation and control Phases of Strategic Management: Phase 1: Basic financial planning Phase 2: Forecast-based planning Phase 3: Externally oriented strategic planning Phase 4: Strategic management Benefits of Strategic Management: Clearer sense of strategic vision for the firm Sharper focus on what is strategically
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Active Gear‚ Inc. (AGI)‚ a privately held athletic and casual footwear company‚ contemplated an acquisition opportunity of Mercury that would significantly improve his business. So‚ he wanted to evaluate this opportunity. This paper introduces the basic situation and feathers of current athletic and casual footwear industry and raises that active management of inventory and production lead times are critical success factors. And then talks about the history‚ marketing‚ products and relate revenue
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