Please explain whether a change in the company's capital structure is likely to reduce its overall WACC, and how would this be achieved?
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Please explain whether a change in the company's capital structure is likely to reduce its overall WACC, and how would this be achieved?
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- Is it realistic to believe that an optimal capital structure exists or might be achieved by a company?critically discuss whether you consider that companies, by integrating a sensible level of gearinginto their capital structure, can minimise their weighted average cost of capital.Why do come companies prefer to use discounting in their capital investment decisions? What is a risk associated with this discounting model?
- What effect would a decreased cost of capital have on a firm's future investments?Is it realistic to believe that an optimal capital structure exists or might be achieved by a company? In 200 words, explain.How does a semi-strong market affect a company’s capital structure? Discuss the possible exposures and impact. Provide examples to justify your reasoning.
- How can you determine if Walmart is operating at an optimal capital structure?What are the major disadvantages of the use of the internal rate of return method of analyzing capital investment proposals?What are the likely effects of a policy in which a company fails to adjust for difference in risk when estimating the cost of capital for their various projects?
- What is the risk-return tradeoff that arises when a firm manages its working capital? Give tangible example/s.What factors contribute to the business risk of a company? What is financial risk? How do the various sources of risk affect the optimal capital structure?Under what assumptions market value of a company does not depend on its capital structure? Discuss.
