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Q.N0,3. (a) AWT Pool Company wishes to finance a Rs.1500 million expansion program and is trying to decide between debt and external equity. Management believes
Q.N0,3. (a) AWT Pool Company wishes to finance a Rs.1500 million expansion program and is trying to decide between debt and external equity. Management believes that the market does not appreciate the company's profit potential and that the common stock is undervalued What type of security (debt or common stock) do you suppose that the company will issue to provide financing, and what will be the market's reaction? What type of security do you think would be issued if management felt the stock were overvalued? Explain. (b) What is Market timing theory of capital structure
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