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Chapter 15 dandy social organization Policy determine of business ? ? Learning Objectives Principles Used in This Chapter 1.A see at cracking Structure Choices in perpetrate 2. outstanding Structure Theory 3.Why Do Capital Structures Differ Across Industries? 4.Making backing Decisions Learning Objectives 1. 2. 3. render a truehearteds smashing construction. Explain why crockeds have different smashing structures and how chief city structure influences a immobiles weighted mediocre g g cost of detonator. Use the basic tools of fiscal outline to analyze a sloppeds funding decision. 1 Principles Used in This Chapter ? Principle 2: There is a Risk-Return Tradeoff. ? Managers are often tempted to take on more debt as it can increase the rate of hold back bring in on the stock(a)holders investment in the firm. ? Ho e e this high return comes with a cost. However, highe et n ith cost ? The high use of debt financial backing make s the firms stock riskier, which increases the required rate of return on stock. ? In addition, it increases the fail risk of the firm. Principles Used in This Chapter ? Principle 3: immediate payment Flows Are the Source of Value. ? Capital structure choice impacts the hard currency flows and thus affects the measure 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 time value of the shareholders beauteousness. The resulting financing mix that maximizes shareholder value is called the optimal capital structure. ? Defining the Firms Capital Structure ? A firms capital structure consists of owners equity and its interest bearing debt, including short-term bank loans. The crew of firms capital structure plus the firms non-interest bearing liabilities such as accounts payable is called the firms financia l structure. ? Defining the Firms Capi! tal Structure ? A firms financial structure is often described...If you loss to get a full essay, order it on our website: BestEssayCheap.com

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