Discuss the theories of capital structure in brief

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Question 1. Profit maximization versus wealth maximization what are the disadvantages of profit maximization and wealth maximization as the goals of the firm?

Question 2. a) All placed $ 1, 00 in a savings account earning 8 percent interest compounded annually. How much money will he have in the account at the end of 4 year?
b) What would be the future sum if RO. 2000 is deposited in a bank at 10% interest for two years?
c) What would be the future sum if RO. 2000 is deposited in a bank at 12% interest for three years?
d) What would be the future sum if RO. 3000 is deposited in a bank at 8% interest for five years?
e) Assume that we are to receive RO. 5000 in three years from now and the rate of interest is 5%. Calculate the present value of RO. 5000.

Question 3.

a) Distinguish between Over and Under Capitalization?

b) Explain the meaning and causes of under capitalization? Discuss its Effects?

c) Discuss the Theories of Capital Structure in brief?

Reference no: EM131755078

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