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Essay specific features
Written by:
Stanley T
Date added:
April 9, 2016
Level:
University
Grade:
A
No of pages / words:
1 / 255
Was viewed:
2565 times
Rating of current essay:
Essay content:
It is suggested that the firm’s capital structure (proportions of debt and equity) is irrelevant to wealth maximization of stockholders. Managers cannot alter the value of the firm by changing the proportion of the firm’s debt and equity in order to increase the required return. .The value of the firm is determined by the firm’s capital budgeting decisions...
displayed 300 characters
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.The value of the firm is determined by the firm’s capital budgeting decisions. Capital structure determines only the proportion of debt and equity in the firm.
Increasing the extent to which a firm uses debt increases both the risk to stockholders and the return they require. On the other hand, higher levels of debt also carry higher costs, which lowers the return on equity...
displayed 300 characters
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