A company with low gearing is one that is mainly being funded or financed by share capital (equity) and reserves‚ whilst the one with a high gearing is mainly funded by loan capital. Now the question to address is which of the two (equity and debt) is cheaper to the company? The answer is that cost of debt is cheaper than cost of equity. This is because debt is less risky than equity and the tax advantage of debt over equity as discussed below: Risk: debt is less risky than equity because: • the
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whether pecking order or trade-off theory can give better determination on firms’ “optimal” capital structure in different scenarios. In trade-off theory‚ it helps to determine the debt proportion and maintain optimal balance in order to maximise company’s market value. However‚ pecking order theory promotes that companies tend to issue debts when company has internal financial deficit or deviation from target capital leverage. Hence‚ it shows mixed evidences such as Shyman-Sunder and Myers (1999) found
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a) Discuss the importance of intuition in decision making? Be practical as possible and make use of your own examples. What is intuition? Intuition is the ability to understand something immediately without the need for conscious reasoning. It is to receive input and ideas without knowing exactly how and where you got them from. Examples where intuition can play an important role in making decisions are: choosing a life partner‚ selecting the right car to buy‚ evaluation of a job‚ deciding
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30017 Corporate Finance Hannes Wagner The included PDF files are examples of case study write-ups made by students of the 30017 Corporate Finance course in 2012-2013. The underlying case was “Hutchison Whampoa Limited: The Capital Structure Decision”. The write-ups were evaluated as “excellent” and the students have agreed for their work to be distributed. All rights to their work remain with them. The instructions that students received were the following: “Your assignment is to provide a written
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Portrait of an ENTP (Extraverted Intuition with Introverted Thinking): The Visionary I am an extraverted intuitive person with the ability to think introvertedly. So what does that mean? I fall into the category of ENTP (Extraverted Intuition with Introverted Thinking) in Jung ’s sixteen modes of personality. According to Myers and Briggs (2012)‚ my life is primarily focused externally on the environment around me‚ which I take things in by intuition. Secondary to this is the internal mode where
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Shawn Berry 2/21/2012 Phil 2753 007 Alfred C. Lent and the Simple Body Swap Intuition Alfred Lent argues that the simple mind body swap overlooks the personal history that comes with a body. He also puts on the table the question that does transplanting a brain from one body to a donor body preserve the original personhood. Lent focuses on what makes a person and what qualifies as a person. Also he discusses how much a person can change‚ i.e. lose or gain body parts‚ memory etc.‚ and remain
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Application of Capital Structure‚ Costs of Capital for Multiple Division firms Case Analysis: Pioneer Petroleum Corporation (PPC).1 Submitted by: Joseph Donato N. Pangilinan‚ FICD Date Presented: April 12‚ 2012 Introduction: This landmark case seeks to break the risk-reward trade off involved in calculating Capital Cost. The object of the solution must be to minimize project risks while maximizing project opportunities available. We want a rate and a rating system that does not unnecessarily
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favorite writers‚ and he is not only a writer‚ he was an Artist with a capital letter. His name is Henry Miller. For me it is always extremely hard to talk about things i love‚ about people i love. Because it is extremely hard to describe and explain why you love one or another thing. That’s why i want to say sorry for probably not acceptable contents of my presentation. It was very hard for me to find a necessary structure for the PP presentation‚ therefore i have confined myself just to show
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As governor‚ Miller campaigned to establish a state lottery. He succeeded in getting laws passed that restricted lottery proceeds to fund pre-kindergarten programs‚ capital and technology enhancements for Georgia schools‚ and most innovative of all‚ the HOPE Scholarship program. HOPE scholarships provide full tuition at any state college or university to any Georgia resident who graduates from high school with at least a B average. In 1992 voters passed the lottery‚ and the programs that the lottery
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Miller’s Overall Strategy: Herman Miller Inc. focuses on growth‚ by introducing innovative products. The company believes that in order to achieve operational excellence‚ the company needs to focus on employees’ motivation and problem solving process. Herman Miller concentrates on producing high quality products. The company is trying to reduce fixed manufacturing cost by outsourcing with their strategic suppliers‚ which helps controlling the company’s overall cost structure and accomplish a competitive
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