Principles of Managerial Finance (14th Edition) (Pearson Series in Finance)
14th Edition
ISBN: 9780133507690
Author: Lawrence J. Gitman, Chad J. Zutter
Publisher: PEARSON
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Chapter 13.4, Problem 13.15RQ
Summary Introduction
To discuss:
Significant factors in addition to quantitative factors where a firm considers in making decision of the capital structure.
Introduction:
The capital structure is the company’s total finances in their total operations and growth through multiple fund sources. The debt comes through the form of bond issues and long term notes payable, while the equity is segregated as common stock, preferred and
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Chapter 13 Solutions
Principles of Managerial Finance (14th Edition) (Pearson Series in Finance)
Ch. 13.1 - Prob. 1FOPCh. 13.1 - Prob. 1FOECh. 13.1 - What does the term leverage mean? How are...Ch. 13.1 - Prob. 13.2RQCh. 13.1 - What is operating leverage? What causes it? How do...Ch. 13.1 - What is financial leverage? What causes it? How do...Ch. 13.1 - What is the general relationship among operating...Ch. 13.2 - What is a firms capital structure? What ratios...Ch. 13.2 - In what ways are the capital structures of U.S....Ch. 13.2 - What is the major benefit of debt financing? How...
Ch. 13.2 - Prob. 13.9RQCh. 13.2 - Prob. 13.10RQCh. 13.2 - Prob. 13.11RQCh. 13.2 - How do the cost of debt, the cost of equity, and...Ch. 13.3 - Explain the EBIT -EPS approach to capital...Ch. 13.4 - Why do maximizing EPS and maximizing value not...Ch. 13.4 - Prob. 13.15RQCh. 13 - Prob. 1ORCh. 13 - Prob. 13.3STPCh. 13 - Canvas Reproductions has fixed operating costs of...Ch. 13 - Prob. 13.2WUECh. 13 - Prob. 13.3WUECh. 13 - Parker Investments has EBIT of 20,000, interest...Ch. 13 - Cobalt Industries had sales of 150,000 units at a...Ch. 13 - Prob. 13.5PCh. 13 - Prob. 13.24PCh. 13 - Prob. 13.25PCh. 13 - Prob. 13.26P
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- What weights should be used when you calculatethe WACC? Discuss the choice between book value and market value weights, and the role of the“target” capital structure for a firm whose actualcapital structure is far removed from the target.arrow_forwardUnder what conditions might capital structure policy affect the value of the firm. Discuss and provide examples and or relevant empirical evidence from academic studies.arrow_forwardWhat is the role of the WACC (weighted average cost of capital) in valuation? How will WACC (weighted average cost of capital) impact the valuation process?arrow_forward
- How does a semi-strong market affect a company’s capital structure? Discuss the possible exposures and impact. Provide examples to justify your reasoning.arrow_forwardWhat are we referring to when we discuss the “optimal capital structure” of a business? Why is the optimal capital structure also referred to as the “target capital structure”?arrow_forwardHow do you call a strategy that separately examines capital market conditions and the investor's objectives and constraints?arrow_forward
- Explain the following statement: The optimal financial policy depends in an important way on the nature of the firm's assets?arrow_forwardWhat are two crucial presuppositions we make when we choose to use the present cost of capital of a firm to evaluate the profitability of projects in which we invest? Be thorough.arrow_forwardWhat is one classification scheme that firms often use to obtain risk-adjusted costsof capital?arrow_forward
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