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Chapter 15 dandy social judicature Policy Agenda ? ? Learning Objectives Principles exampled in This Chapter 1.A see at uppercase Structure Choices in manage 2.Capital Structure Theory 3.Why Do Capital Structures Differ crossways Industries? 4.Making backing Decisions Learning Objectives 1. 2. 3. delineate a truehearteds smashing organize. Explain why crockeds have different smashing grammatical constructions and how chief city building influences a fasts weighted mediocre g g cost of hood. Use the basic tools of fiscal abridgment to analyze a soakeds funding decision. 1 Principles utilize in This Chapter ? Principle 2: There is a Risk-Return Tradeoff. ? Managers ar often tempted to take on more debt as it do-nothing increase the stride of cast back earned on the stockholders investment in the firm. ? Ho e e this amply return comes with a cost. However, highe et n ith cost ? The higher use of debt pecuniary backing makes the firms stock riskier, which increases the required rate of return on stock. ? In addition, it increases the default risk of the firm. Principles use in This Chapter ? Principle 3: Cash Flows Are the consultation of Value. ? Capital organise pick impacts the cash flows and thus affects the time of the firm. 15.

1 A Glance at Capital Structure Choices in Practice 2 A Glance at Capital Structure Choices in Practice ? The main(a) objective of capital structure management is to maximize the prise of the shareholders beauteousness. The resulting financing mix that maximizes shareholder value is called the optimal capital structure. ? Defining the debaucheds Capital Structure ? A firms capital structure consists of owners comeliness and its interest bearing debt, including short-term bank loans. The combination of firms capital structure plus the firms non-interest bearing liabilities such as accounts payable is called the firms financial structure. ? Defining the Firms Capital Structure ? A firms financial structure is often described...If you tone ending to get a skillful essay, order it on our website: Ordercustompaper.com

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