Question
When establishing a company's target capital structure, what are the THREE likely factors a manager may consider? Some of the assumptions of Modiglianiand Miller's theory
When establishing a company's target capital structure, what are the THREE likely factors a manager may consider?
Some of the assumptions of Modiglianiand Miller's theory are no brokerage costs and personal taxes, investors can borrow at the same rate as companies, earnings before interest and taxes is not affected by the use of debt. Do you agree that these assumptions exist in real world?
The MM II proposition is based on the assumption that a company's cost of equity capital is a positive linear function of a company's capital structure. How?
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1 When establishing a companys target capital structure a manager may consider the following three factors Cost of capital The cost of capital refers ...
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Intermediate Financial Management
Authors: Brigham, Daves
10th Edition
978-1439051764, 1111783659, 9780324594690, 1439051763, 9781111783655, 324594690, 978-1111021573
