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How are the weights determined to arrive at the optimal weighted average cost of capital?
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∙ 12y ago
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∙ 12y ago
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Optimum capital structure in financial management?
Capital structure with a minimum weighted-average cost of capital and thereby maximizes the value of the firm's stock, but it does not maximize earnings per share (Eps). Greater leverage maximizes EPS but also increases risk. Thus, the highest stock price is not reached by maximizing EPS. The optimal capital structure usually involves some debt, but not 100% debt. Ordinarily, some firms cannot identify this optimal point precisely, but they should attempt to find an optimal range for the capital structure. The required rate of return on equity capital (R) can be estimated in various ways, for example, by adding a percentage to the firm's long-term cost of debt.
What is the optimal capital structure?
optimal capital stucture is that where the firm value is high and the wacc of the firm is low and that capital structure a firm can follow constantly and that capital stucture not become a burdon on firm.
What is optimal working capital?
Optimal working capital is that point where exact amount of working capital is available to run day to day activities and there is no excess or shortage of working capital at any point.
What is the difference between optimal capital structure and target capital structure?
optimal capital structure means using the resources of capital optimally, at is where they can utilised properly. target capital structure means investment made in the certain project so that they can utilise the resource of capital properly.
How do you calculate optimal capital structure?
very carefully
How would you identify the optimal cost of capital for an organization?
To identify the optimal cost of capital for an organization the cost of debt and equity is needed. The preferred stock is also needed.
What is optimal capital structure?
ots is such amount capital which is a company maintaims while seeinds it s cost.
What is the differences between capital structure and optimal capital structure?
capital structure is the structure/form/shape/component of total amount of capital owned by a company .... means the total issued or subscribed capital whether its in the form of ordinary shares, PTCs ,TFCs, etc optimal capital structure is the such amount of capital which a company maintains while seeings its cost.
What is the mix of optimal capital structure?
There is nothing called optimal capital structure. optimal capital structure for a company refers to the composition of debt and equity, where the firm cost of capital is the lowest and value of the firm the highest. Optima capital structure for one company can not be same for the other company as well as the firms differ from each other in their basic characteristics. Even if the firm have same basic characteristics, they differ in Human resource, skill set etc.
How do you determine the optimal level of advertising?
the optimal level of advertising expenditure for the firm is determined where the marginal revenue increase in costs of advertising are equal to the marginal increase in revenue
The firm's optimal mix of debt and equity is called its?
target capital structure
Is there a universal optimal capital structure that would benefit all firms?
best universal capital structure for all companies?
