Reference no: EM131879271
Final Project
Select a publicly held company and analyze its capital-structure, applying the theories and principles found in Chapter 15 of the text.
The structure of your research paper should include:
- A preview of capital structure issues
- Business and financial risks related to capital-structure
- Modigliani and Miller's [MM] capital-structure theory
- Criticisms of the MM model and assumptions
- Capital-structure evidence and implications
- Estimating the firm's optimal capital-structure
A firm's optimal capital-structure is that mix of debt and equity that maximizes the stock price. At any point in time, management has a specific target capital structure in mind, presumably the optimal one, though this target may change over time. For example, financial management may choose a 50% equity financing [stock] and 50% debt [bond] financing.
Several factors influence a firm's capital structure, including:
- Business risk
- Tax position
- The need for financial flexibility
- Managerial conservativeness
- Growth opportunities
Business risk is the riskiness inherent in the firm's operations if it uses no debt.
This report is intended to be a capital-structure analysis of your selected public company. Your paper is intended to be an executive summary of your analysis, and is limited to a minimum of 5-7 pages of text, excluding the title page, table of contents, graphs, charts, tables, etc.
Use 6th edition APA