Hi, could you please assist with this question? You are an investment banking consultant advising an...

Hi, could you please assist with this question?

You are an investment banking consultant advising an investment company. The CEO of the company tells you that she believes that capital structure does not have an impact on firm value. On what basis might they make this comment? State whether you agree or not with this position and explain why. Does the nature of this firm’s business risk change your answer? Fully explain your reasoning.

Solutions

Expert Solution

Since this is an investment company,the capital structure of this company will be highly impactful because this company will need to have optimum mix of equity capital and capital so that it will help the company in maximizing the shareholders return but it will also help the company in not liquidating the investments, because it will have to pay off its debt repayment.

Investment companies are generally taking money from the various investors for the purpose of the investment and their needed to make a rate of return for their investors and they always charge commission in respect of the investors, but their capital structure is also important because there are other operational charges as well, and if the company is not able to meet with the charges, it will have to liquidate the investment so, the existence of the company would be in danger, and I think that investment company should also be having an optimum mix of debt capital and equity capital in order to maximize the rate of the return and minimise risk and inflate the value of shareholders in the long run.

jeff jeffy answered 1 year ago

Next > < Previous

Related Solutions

Hi, could you please assist with this question? You are an investment banking consultant advising a...

Hi, could you please assist with this question? You are an investment banking consultant advising a mining company. The CEO of the company tells you that she believes that capital structure does not have an impact on firm value. On what basis might they make this comment? State whether you agree or not with this position and explain why. Does the nature of this firm’s business risk change your answer? Fully explain your reasoning. Thanks kindly

Hi. Please could you assist me with the question below. I found the same question on...

Hi. Please could you assist me with the question below. I found the same question on the Chegg website, unfortunately, the answer given does not make use of the driver function which is required by the question. Please could you provide me with the full code for this question, including the main function using c++ and codeblocks. The standard recursive version of the Fibonacci function (explained in Malik pg. 379) is extremely inefficient due to identical calls being repeated. Consider...

Hi There Could you please assist on below short essay... DOMESTIC workers will no longer be...

Hi There Could you please assist on below short essay... DOMESTIC workers will no longer be subjected to meagre salaries as the government has adjusted the minimum wage for domestic workers, with effect from December last year. The announcement was made by the Department of Labour Minister Mildred Oliphant and it coincided with the signing into law of the National Minimum Wage Bill by President Cyril Ramaphosa. According to the Department of Labour’s new rates, domestic workers working in Area...

Could you please assist with this question? If possible could you illustrate in Excel? The Langley...

Could you please assist with this question? If possible could you illustrate in Excel? The Langley tire company measures their tire stems to see if they hold air. They produce 300 tires a month and record the defective rate for each day's production. Below are the results of this month's tests. a. Determine the 3 sigma UCL and LCL b. Does the tire stem process appear to be in statisical control? Day Fraction Defective Day Fraction Defective Day Fraction Defective...

Hi there, I am having difficulty with the attached homework question. If you guys could please...

Hi there, I am having difficulty with the attached homework question. If you guys could please help work through the steps. My balance sheet isn't balancing :/ These financial statement items for Fairview Corporation at year-end, July 31, 2017. Salaries and wages payable $2,080 Salaries and wages expense 57,500 Supplies expense 15,600 Equipment 18,500 Accounts payable 4,100 Service revenue 66,100 Rent revenue 8,500 Notes payable (due in 2020) 1,800 Common stock 16,000 Cash 29,200 Accounts receivable 9,780 Accumulated depreciation-equipment 6,000...

Hi please assist me in answering question in short essay type format a & b separate....

Hi please assist me in answering question in short essay type format a & b separate. Thank you so much. 1a) Discuss the cash conversion cycle. What are the 3 stages and how is it calculated. 1b) Discuss what is finiancial planning. Provide meaning of Financial Planning, Types of Financial Plan (medium, short term, long term). What period it covers?

Could someone please assist me with this question. Select one of the strategy formulation analytic tools...

Could someone please assist me with this question. Select one of the strategy formulation analytic tools Special tools they can use to assist them in formulating strategies include the following: and complete based on the information (NIKE) gathered in the Week 3 Learning Activities; the tools to select from are: Space Matrix Boston Consulting Group (BCG) Matrix IE Matrix Once you have completed the tool discuss the outcome in terms of what strategic direction the selected company should take and...

Hi, could you provide an explantion for the following questions please in relation to the decision...

Hi, could you provide an explantion for the following questions please in relation to the decision making process. These questions are in relation to seeking assistance from other sources so that your decision regarding advice, feedback and support are the best they can be Q1 describe an example of how you sought advice as required to assist in the decision-making process? Q2 describe an example of how you sought feedback as required to assist in the decision-making process? Q3 describe...

You are working as a consultant and have been hired by a company to assist in...

You are working as a consultant and have been hired by a company to assist in creating a company Code of Ethics in order to attract and retain more customers to your products and to prove the company’s ethical conduct & practices. This smaller, private company sells footwear for the Canadian and American marketplaces. The company has made the decision to do business with a supplier in Brazil. The initial product quality has been very good, and the delivery of...

The following are questions for discussion assignment. Could you please assist me with these questions? Thank...

The following are questions for discussion assignment. Could you please assist me with these questions? Thank you. Rite Aid Corporation; NYSE: RAD Income Statement: Listed as Consolidated of Operations, page 76 Balance Sheet: Listed as Consolidated Balance Sheets, page 75 Statement of Stockholder's Equity: Listed as Consolidated Statements of Stockholders' Equity, page 78 Statement of Cash Flows: Listed as Consolidated Statements of Cash Flows, page 79 https://www.sec.gov/Archives/edgar/data/84129/000104746918003207/a2235393z10-k.htm SEC 10K Project: Income Statement Respond to one or more question(s) from each...

Subjects