Q1.1. According to the traditional approach, there is an exact mix of equity and debt at this level market value of the company is maximum. Explain a basic numerical example briefly.

Q1.2. The value of the firm depends neither on its dividend policy nor its decision to raise capital by issuing stock or selling debt... Explain the theorem briefly, that is often called the capital structure irrelevance principle.

Q1.3. Why most small and medium-sized businesses use factoring, despite its relatively higher cost compared to the other alternatives?

Q3. 1. What is an external financing need in financial planning and forecasting and which factors should be taking into account to reduce the overall cost of capital of a firm?

Q3.2. Which factors indicate the lack of working capital of a company? Explain briefly.

Q3.3. Explain the stock price before- and after the stock split, and show how the increasing number of stocks affects the market value of share and shareholders wealth.