Capital Structure Theories Capital Structure Capital Structure is the proportion of debt‚ preference and equity capitals in the total financing of the firm’s assets. The main objective of financial management is to maximize the value of the equity shares of the firm. Given this objective‚ the firm has to choose that financing mix/capital structure that results in maximizing the wealth of the equity shareholders. Such a capital structure is called as the optimum capital structure. At the optimum
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AO1 AO2 AO3 Describe and evaluate two theories of the formation of relationships One theory is ‘The Matching Hypothesis’ which is a social psychological theory based on relationships‚ proposed by Goffman in 1952. It suggests that in order for a relationship to be a long and successful one; both partners in the relationship must be equally matched in attractiveness. The reason for this is due to fear of rejection‚ therefore when searching for a potential life partner the primary drive is to
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Assignment: Capital Structure PART A 1. Apple Corporation has 2.5 million shares outstanding with a market value of $2.00 each (expected return = 16%) and debt with a market value of $1‚ 000‚000 and a return of 10% Required a. What is the return on the capital of Apple Corporation? [Show all workings and formulae) [7.5 marks] 2. Samsung generates pre-tax earnings of $2‚000‚000 per year. Currently it has issued 1 million shares which sell for $10 each. Samsung has no debt in
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Social Interaction and Social Structure SOCIAL INTERACTION is the‚ social action of two or more people taking each other into account in their action SOCIAL ACTION refers to those actions which people are conscious of doing because of other people. There are some studies about Social Interaction. Those are ETHNOMETHODOLOGY and DRAMATURGY. ETHNOMETHODOLOGY is the study of the norms governing social interaction‚ this approach normally involves purposely violating commonly understood
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Theory of Capital Structure - A Review Stein Frydenberg£ April 29‚ 2004 ABSTRACT This paper is a review of the central theoretical literature. The most important arguments for what could determine capital structure is the pecking order theory and the static trade off theory. These two theories are reviewed‚ but neither of them provides a complete description of the situation and why some firms prefer equity and others debt under different circumstances. The paper is ended by a summary where the
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Look at Merton’s Modes of Adaptation. Give at least one example of how someone‚ perhaps someone in the criminal justice system‚ uses each mode. Robert K. Merton’s "Social Structure and Anomie" (1938). People adapt in many different ways. Just as part of a river that suddenly finds it‚ self blocked by an obstacle and may split and find a new way to the ocean. Merton outlines five ways in which people adapt to society’s goals and means and they are as follows: 1) Conformity - Adherence to the practices
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functionalism‚ conflict theory‚ and the insurrectionist perspective‚ which help serve as a means of helping frame research. Functionalism‚ also known as structural functionalism‚ sees society as a complex network working together in balance. Those who study functionalism examin society by contemplating what each separate part of the network does to help society work in harmony. Functionalist view society as a well-functioning self-sufficient machine. The functionalism theory is very broad in that
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eventually form a functional society. It doesn’t study the individuals of society‚ but provides analysis on the overall social system‚ its functionality‚ and how it affects human behaviour. This theory can also be understood by looking at the metaphor of organs within a system. Organs‚ much like Institutions‚ work together to form a functional system‚ where Institutions form a society. The theory of Structural Functionalism dates back to the early 20th century‚ and was created by Emile Durkheim and Herbert
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Exercise on Unit 2 – Theories of Capital Structure 1. Companies U & L are identical in all respect except that U is unlevered while L is levered. Company L has Rs. 20 Lacs of 8% debentures outstanding. Assume a. All MM assumptions are met b. Tax rate is 35% c. EBIT is Rs. 6 Lacs d. Equity capitalization rate of company U is 10% Find the following: a. Value of each firm according to MM approach b. Suppose Value of U is Rs. 25 Lacs and Value of L Rs. 35 Lacs. According
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solidarity and stability. The differences in this complex system‚ are social structures that shaped our lives through our family‚ religion‚ schools‚ and our government. Each of these social functions are influenced by and dependent on its relationships with each other that guide structure to our everyday lives. The structural-functional perspective work together at Hudson County Community College through socialization‚ learning‚ and social placement‚ these parts work together because within functionalism
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