FINC 5000 LESSON NOTES – WEEK 7 CHAPTER 15 Capital Structure Introduction: Capital Structure Theory - Capital Structure refers to the proportion of debt and equity being used to finance a firm’s assets: Assets = Debt + Equity Capital Structure - In this lesson we will examine the notion that capital structure affects the value of the firm. That is, the value of the firm might change with the amount of debt that is present. -
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compared to that of non-family businesses. Most research done in the field focused on corporate governance measures, family relationships, succession, and performance indicators of family owned businesses. This research article also deals with capital structure & performance of family businesses in India. Article 1: (Kim & Gao) Does Family involvement increase business performance Family involvement in business management attracts much scholarly attention in the field of family
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FINC 5000 LESSON NOTES – WEEK 7 CHAPTER 15 Capital Structure Introduction: Capital Structure Theory - Capital Structure refers to the proportion of debt and equity being used to finance a firm’s assets: Assets = Debt + Equity Capital Structure - In this lesson we will examine the notion that capital structure affects the value of the firm. That is, the value of the firm might change with the amount of debt that is present. -
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Modigliani and Miller's Capital-Structure Irrelevance Proposition Modigliani and Miller, two professors in the 1950s, studied capital-structure theory intensely. From their analysis, they developed the capital-structure irrelevance proposition. Essentially, they hypothesized that in perfect markets, it does not matter what capital structure a company uses to finance its operations. The MM study is based on the following key assumptions: * No taxes * No transaction costs * No bankruptcy
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Lecture 13: Capital Structure Theory Exercises Question 1 Levered Inc. and Unlevered Inc. are identical in every respect except for capital structure. Both companies expect to earn $150 million in perpetuity, and both distribute all of their earnings as dividends. Levered’s perpetual debt has a market value of $300 million and the required return on its debt is 7%. Levered’s stock sells for $100 per share, and there are 5 million shares outstanding. Unlevered has 8 million shares outstanding worth
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Evaluation of capital structure 1.1Capital Structure: Basic Concepts The purpose of this chapter is to introduce the student to the foundations of capital structure concepts. The chapter first discusses capital structure decisions in an ideal world without taxes or transaction costs. This discussion leads to the famous Modigliani-Miller Propositions I and II that show that a firm's capital structure is a matter of indifference. The discussion next adds corporate taxes and the tax deductibility
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The valuation effects of long-term changes in capital structure ABSTRACT The objective of this study is to analyze and examine the changes in capital structure that do not affect the value of the firm and we have to know the relationship between the capital structure and the firm’s value. We are try to learn the changes in capital structure that do not affected the firm’s value and want to know relationship between the capital structure and the value of firm. For this study we used
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Impacts of Profitability and Financial Leverage on Firm’s Capital Structure By [Your Name] [Instructor’s Name] [Institution’s Name] [Date] Declaration While conducting the proposed research work, I, being a hard-working, innovative and conscientious researcher, come up with the factual severity of consequences allied with an act of plagiarising content from others’ work. Moreover, I do comprehend the rules and regulations my university encompasses against submitting a plagiarised
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contains a critical analysis of the capital structure strategy employed by Leighton Holdings Ltd during the Global Financial Crisis (GFC) and also an assessment of optimal capital structure Leighton should use to fund future investments. Examination of the changes of the capital structure of the company over pre-GFC and post-GFC period (2004-2010) reveals a range of considerations were deliberated in the financing decision; these include not only the capital market conditions but also the size
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Critical Review on ‘Revisiting the Capital Structure puzzle: UK Evidence’ Assignment for PGBS0140 Accounting & Finance for Managers Plymouth Business School Module No.:PGBS0140 Module: Accounting & Finance for Managers Group Members and Student No.: Word count: 1492 Critical Review on ‘Revisiting the Capital Structure puzzle: UK Evidence’ Al-Najjar, B. and Hussainey, K. (2011). Revisiting the capital structure puzzle: UK evidence. The Journal of Risk Finance, 12 (4), 329-
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