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10 pages/≈2750 words
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Style:
APA
Subject:
Accounting, Finance, SPSS
Type:
Coursework
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English (U.S.)
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Topic:

Capital Structure and its Key Elements

Coursework Instructions:

Need find a Finance major writer use the Finance knowledge to answer!
All the questions will be in the link "FIN Corporation Finance"
For Question 8. The article " Graham-Harvey survey article" in the links.
There is "FIN note" link as reference.
The Question 16(part 1 &2) need in the separate Excel spreadsheet. 1 page
Other questions's answers need in the same Word doc. 9 pages
It's not essay, some questions don't need to write too much, just point out the answers.
Requirements:
1. Answer all questions CLEARLY and CONCISELY.
2. Show ALL work and provide explanations. Answers without work or explanations will NOT receive credit.
3. Label all graphs
4. Provide spreadsheets
5. NEATNESS COUNTS. DO YOUR WORK ESLEWHERE AND THEN TRANSFER YOUR FINAL STEPS AND CALCULATIONS
6. Need to cite the resource you used at the end of reference sheet.
7. Don't need to copy the questions, just label each specific questions' number and get answers.
NEED TO SUMBIT ON THE Turnitin, software to check for plagiarism against other written materials. Make sure you did your own work.
Need find a professional good Finance Major writer use the Finance knowledge to answer the questions, thanks!

Corporation Finance Question

  1. Define capital structure and list the key elements of capital structure.  (1/2 page)
  2. Describe the main results of Modigliani and Miller Propositions (I and II) for: ( 1 page)

    1. 1958 model – no taxes, no bankruptcy costs

    2. 1963 model – with taxes, no bankruptcy costs

    3. Tradeoff model – with taxes and bankruptcy costs

In total there are 6 results

3. Describe the pecking order theory of capital structure. (1/2 page)

4. Discuss the importance of game theory in corporate finance; Provide 5 real-world examples. (1/2 page)

5. Discuss the motivations for mergers and acquisitions    (1/2 page)

6. Discuss the types and motivations for divestures.    (1/2 page)

7. Describe the similarities between corporate social responsibility, socially responsible investing, impact investing and thematic investing  (1/2 page)

8. Summarize the results of the Graham-Harvey survey article on corporate finance in practice (on blackboard).  (1 page).  Article is in the link, please check.

9. Discuss the evolution of shareholder activism (include gadfly, institutional investors, hedge funds). (1/2 page)

10.  Discuss the difference between angel investing, venture capital, LBOs, private equity. Include 2 companies in each category and list some of their investments.  (1/2 page)

11.  Distinguish between Chapter 7 bankruptcies and Chapter 11 bankruptcies. Cite specific examples. Identify any cases where equity holders have received payout in bankruptcy?  (1/2 page)

12.  Discuss the role of over and underinvestment when a firm is in financial distress. (1/2 page)

13.  Discuss the similarities in dividends, share repurchases, and stock splits/stock dividends. (1/2 page)

14.  How is the quality of corporate governance measured? (1/2 page)

15.  How is finance different than accounting? Why is CF better than NI for firm valuation? (1/2 page)

16.  Basic Leveraged Buyout Problem-Excel Recommended (Use Excel to solve )  1 page

Part 1)

A Private Equity firm acquires XYZ Corp., which generates $100 million in EBITDA at the time of the deal, for a 10x EBITDA purchase multiple and funds the deal with 60% Debt.    (Hint: Entry Enterprise Value = EBITDA * Multiple).

The company’s EBITDA grows to $150 million by Year 5, but the exit multiple (valuation at which the PE sells the XYZ Corp.) drops to 9x EBITDA. XYZ Corp. repays $250 million of Debt throughout the course of the investment and generates $50 million in extra Cash by end of Year 5 as well. Calculate the IRR of the investment when the Private Equity buyer sells XYZ Corp at the end of Year 5.

(Hint: Find Entry and Exit Equity Value to calculate IRR)

Part 2)

Suppose the Private Equity firm wanted to achieve a higher IRR for the investment in XYZ Corp., what are some ways to increase this deal’s returns?

BONUS QUESTION (MANDATORY).    (1/2 page)

Provide your best joke. Use visual aids as necessary.

Coursework Sample Content Preview:

Corporate Finance Questions
Your Name
Subject and Section
Professor’s Name
December 9, 2019
1 Define capital structure and list the key elements of capital structure. (1/2 page)
Capital structure refers to how the company’s management strategically balances different sources of funding such as internal financing, debt, and equity in order to reach the necessary funding that it needs to fuel its operations. Although there are plenty of frameworks to understand capital structure, Graham and Harvey (2002), discussed two main theories which are (1) trade-off theory and (2) the pecking-order theory. On the one hand, the trade-off theory suggests that in deciding the right balance of capital structure between debt and equity, the management always places primary consideration on the benefits and risks included in each decision. On the other hand, the pecking order theory provides that choosing the right balance of capital structure always provides a hierarchy, from internal financing to debt, and lastly to equity.
The six (6) elements of capital structure are (1) capital mix, (2) maturity and priority, (3) terms and conditions firms, (4) currency firms, (5) financial innovations, and (6) financial market segments CITATION Gul78 \l 1033 (Gulati, 1978).
2 Describe the main results of Modigliani and Miller Propositions (I and II) for: ( 1 page)
1 1958 model – no taxes, no bankruptcy costs
In Modigliani’s and Miller’s First Proposition under the 1958 Model (no taxes), they concluded that the value of the unlevered firm is equal to the value of a levered firm. Thus, in order to get optimal investments, investors can borrow money to purchase securities of unleveraged firms, when they are undervalued as compared to the other. However, it must also be noted that this proposition can only exist with three important assumption requisites which are (1) absence of taxes, (2) zero-cost transactions, and (3) there are same rates for both individuals and corporations CITATION Mil88 \l 1033 (Miller, 1988).
In contrast, the authors’ second proposition shows that if a firm wants to lower capital costs for borrowing, then it is better to have the right balance between debt and equity since too much preference on debt (which is assumed to have lesser costs) would also increase the price of the equity mix. In turn, this would balance with one another.
2 1963 model – with taxes, no bankruptcy costs
Subsequently, the First Proposition of the 1963 Model would show that the increase in risks associated with depending on the debt would also raise the investors’ ROE. Such is similar to the idea of using WACC in deriving value of equity. However, this can be assumed when the borrowing rates and the same and without any associated costs.
In contrast, the authors’ second proposition under the 1963 Model, also states that raising the risks to be shouldered by the investors also increases their ROE. However, the addition of taxes shows that a capital structure wherein equity values are replaced with low-quality debt would not be efficient in meeting its obligations.
3 Tradeoff model – with taxes and bankruptcy costs
Lastly, the authors’ trade-off theory ...
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