PDF-postion paperThe Inimical Cost of Debt Capital in Indiais intended as

September 2011 2 The Inimical C ost of Capital in India Acknowledgements Contents Executive summaryApproach and methodologyDiscerning the cost of capital in IndiaThe macroeconomic perspectivePerspec. Capital Structure. Presenter’s name. Presenter’s title. dd. Month . yyyy. 1. Introduction. The capital structure decision affects financial risk and, hence, the value of the company.. The capital structure theory helps us understand the factors most important in the relationship between capital structure and the value of the company.. Financing a Firm with Equity. You are considering an investment opportunity. . For an initial investment of $800 this year, the project will generate cash flows of either $1400 or $900 next year, depending on whether the economy is strong or weak, respectively. Both scenarios are equally likely.. Corporate Finance 35. Capital structure: An introduction to the debate. Different types of gearing. The effect of gearing. Differentiate business and financial risk. The underlying assumptions, rationale and conclusions of Modigliani and Miller’s models in a world without tax. INCLUDING CAPITAL IMPROVEMENTS. under PRIVATE & PUBLIC OWNERSHIP: 2013. ESTIMATED AVERAGE MONTHLY COST IN DOLLARS. Cost item. Ownership. Savings. Private. Public. Current bill. 1. 101.76. 57.51. The cost of capital depends on the nature of the capital used. . It . is for this reason that we must start by analyzing the various sources of funds that are used and the way in which these funds are raised. Thus, we study the environment in which the firm raises these funds.. Presented by Dr. Monika Aggarwal. . Post Graduate Govt. College, CHD. 1. Objectives of the Study. Understand the theories of the . relationship. . between capital structure and the value of the firm. What is VC?. Money provided by investors to startup firms and small businesses with perceived long-term growth potential . No access to Capital Markets. High risk, above average returns. Who?. Wealthy investors . Cost of capital. Require return versus cost of capital. Any returns for investors are costs for the company. NPV. What is the required rate of return? What does it mean?. What is the difference between: required rate of return / appropriate discount rate and cost of capital?. RWJ-Chapter 14. Once again: . What’s the Big Idea?. Earlier chapters on capital budgeting focused on the appropriate size and timing of cash flows.. This chapter discusses the appropriate discount rate when cash flows are risky.. Capital Restructuring. Capital restructuring involves changing the amount of leverage a firm has without changing the firm’s assets. The firm can increase leverage by issuing debt and repurchasing outstanding shares. 1. Global Cost and Availability of Capital. How a firm headquartered in a country with an illiquid and segmented capital market achieves a lower global cost and greater availability of capital. Analyze the linkage between cost and availability of capital. Chapter 18. outline. T. arget . leverage ratio. Southwest:. Fixed . versus Random levels of Debt. The WACC method. Avco. Industries. Project valuation using WACC . The . WACC/APV . link. Project . based . Capital Structure in a Perfect Market Chapter 14 outline Equity and or debt financing Return on levered equity Modigliani-Miller theorems: MM1: firm value not affected MM2: expected returns are affected Theories of capital structure . . Value of firm(V) = EBIT/. K. o. Two school of thoughts. :. Financing decision affects the valuation. Net Income Approach(NI). Financing decision does not affect the valuation.