Capital Structure

Objective

• Calculate the impact of capital structure changes on firm value

Reading

• Chapter 17: Capital Structure in a Perfect Market
• Chapter 18: Taxes and Capital Structure
• Chapter 19: More Imperfect-Market Capital Structure

Assignment

• Capital Structure Project

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Capital Structure Overview

Modigliani and Miller

Optimal Financing

The Trade-Off

Aswath Damodaran @ NYU in 2014

The Cost of Capital

Aswath Damodaran @ NYU in 2014

Moving to the Optimal Financing Mix

Aswath Damodaran @ NYU in 2014

Homemade Leverage

Homemade Leverage Example (Part 1) (Part 2) (Part 3)

Optional

Leveraged Buyout