The optimal capital structure Is there such a thing? Is there an Optimal Capital Structure? • Miller and Modigliani: • 1. You cannot derive value from financing strategies. If you finance with debt in a world with taxes‚ then you might add value from interest payments tax shields • Question: • If this is true for everyone‚ then why do not find more debt financing in more companies‚ i.e you find little debt in technological companies Myers and the Pecking Order • Prof. Myers found the following
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no costs of financial distress or bankruptcy‚ what percentage of the firm’s capital structure would be financed by debt? 3 Exercise 3 The Holland Company expects perpetual EBIT of $4 mil. per year; the firm’s after-tax‚ all-equity discount rate (r0) is 15%; company is subject to the tax rate of 35%; the pre-tax cost of the firm’s debt capital is 10% p.a.‚ and the firm has $10 mil. of debt in its capital structure. What is Holland’s value? What is Holland’s cost of equity (re)? What
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always been an important issue in an organization‚ but few organizations have not made motivation and job satisfaction top priorities or even neglected the issue at times. The failure of the managers in the organization to determine the motivational factors of the employees will create dissatisfaction of the employees which will eventually result to the decrease in productivity of the employees. The managers of the organization should properly utilize its people who are considered the most important
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INFA 670 FACTORS INFLUENCING THE ADOPTION OF CLOUD COMPUTING BY THE FEDERAL GOVERNMENT A Project Report Presented to the Faculty of The University of Maryland University College In partial fulfillment of the provisions for the degree of Masters of Science In Information Technology By Derek A. Smith For Professor Jeffrey H Bonner‚ INFA 670 November 8‚ 2011 Introduction The Federal Government has an extensive infrastructure‚ a broad user base in agencies with a variety of missions
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Corporation‚ 2010). Recently‚ Toyota has faced a mass recall. There are several external and internal factors to consider as Toyota ’s management reevaluates and reformulates its four functions: planning‚ organizing‚ leading‚ and controlling. Factors that impact the four functions are: globalization‚ technology‚ innovation‚ diversity‚ and ethics. Managers need to use delegation to manage all functions and factors to reestablish the credibility the company. Planning is a decision making process that incorporates
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The colonial times were a very important part of American history. There were many factors that influenced life in the colonies. Some of the most important factors were slavery‚ leisure‚ and family. These factors influenced life in the colonies greatly. There were many slaves in the colonies. Slavery started in Virginia‚ and came from West Africa‚ by slaves going on the Middle Passage. Slavery in the colonies began in Virginia with tobacco planters. From Virginia‚ it spread north and south. African
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To what extent do sociocultural factors influence human relationships? Human relationships are complex and consist of many stages‚ such as attraction‚ formation and maintenance‚ and possibly ending. There are also different types of relationships‚ such as romantic relationships‚ friendships or relationships between kin. Many possible factors exist that can affect relationships‚ one of them being culture. Culture is hard to define‚ but it could be defined as a system of values that a group of people
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Assignment 2: Business Financing and the Capital Structure Principles of Finance Finance 100 December 12‚ 2013 Business Financing and the Capital Structure Raising Business Capital As a financial advisor to this business there are two options to consider for raising business capital‚ equity financing and debt financing. The details‚ advantages‚ and disadvantages of both options will be provided. Also information about raising capital by selecting an investment banker
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By Chidera onyemenam As comprehensive as this topic might seem‚ factors influencing media as it concerns structure‚ number of outlets and contents can be broadly classified into two. a) EXTERNAL FACTORS b) INTERNAL FACTORS EXTERNAL FACTORS: this covers the influence on the media as a result of the environment within which the mass media communication system operates. They include: i)cultural influence
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Solution 1: (i) P0 = D1 Ke - g CA – IPC TEST CAPITAL STRUCTURE = 3.50 (1.06) 0.15 – 0.06 = `41.22 (ii) Ke = D1 + g P0 0.15 = 3.50 (1 + g) + g 50 7.50 = 3.50 + 3.50g + 50g g= 4 = 7.48% 53.5 Solution 2: (i) Determination of EPS at EBIT level of `22‚00‚000 Financing Plan (a) (b) Equity Shares (`) Debentures (`) Pref. EBIT 22‚00‚000 22‚00‚000 Less: Interest (16‚000) (1‚21‚000) Taxable Income 21‚84‚000 20‚79‚000 Less: Tax @ 30% (6‚55‚200) (6‚23‚700) EAT 15‚28‚800 14‚55‚300 Less: Dividend on Pref
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