Notes for Finance

Next weeks PowerPoint will be cast much on the substance than the oral presentation. No singer notes are required. Risk Return/Cash Flows What are the unconnected strategies for the cost of capital? Equity or debt. Financial supplement Borrowing more means your ability to make more money but increases your risk of losing more money. Capital anatomical reference structure consists of all the ways in which a partnership is financed. Debt proportionality = Total liabilities/total assets Book nurture of the debt symmetry is eer lower than the market value. Variance equates risk. Favorable pecuniary supplement happens when a firms earning on its investments is higher(prenominal) than its payments on its debt. Unfavorable financial leveraging is the opposite. The average debt to value ratio is 42%. Capital structure irrelevance conjecture is ground on unrealistic assumptions. Modigliani and Miller Capital structure Theorem: 1. Th e funds flows that a firm generates are not touch on by how the firm is financed 2. Financial markets are perfect. The number of pieced that a pizza is cut into doesnt affect the total core of pizza that is eaten. Why does capital structure matter in human beings?

In reality, financial mangers care a gigantic call for about how their firms are financed. Indeed, there can be veto consequences for firms that select an inappropriate capital structure, which means that, in reality, at least one of the two M&M assumptions is violated. ravishment of Assumption 1 1. Interest is a tax-deductible exp ense, epoch dividends are not. Thus, after! wards taxes, firms have more money to run out to their debt and equity holders if they affair more debt financing. There are other violations, but they were not discussed in class. What is finance? Finance is the teach of how people and businesses estimate investments and raise capital to fund them.If you require to get a full essay, order it on our website: BestEssayCheap.com

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