Describe the company capital structure

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Corporate Finance Assignment -

Answer the following questions related to the publicly traded company you selected for the corporate governance paper.

1. Using information obtained from FactSet, describe the company's capital structure. Be sure to discuss the overall mix of equity vs. debt, the various types of equity, the various types of debt, the mix of short-term vs. long-term debt, and the trends in these over time. Which of the capital structure theories/factors discussed in the readings are relevant to your company's situation? Explain.

2. In the Module 3 WACC Project you used the current market values of debt and equity to compute the WACC. This is a good practice if the company's capital structure is near its target capital structure. We will now assume that the company is changing its capital structure. Re-evaluate the capital project presented in the Module 2 Capital Budgeting Project under the following mutually exclusive scenarios. 1) The company funds the entire initial investment (CF0) by issuing additional long-term debt. 2) The company funds the entire initial investment (CF0) by issuing common equity. Under both scenarios, assume the costs of the individual sources of capital do not change. In other words, update the 'weights' but not the costs in the WACC formula.

3. Use the hypothetical WACC values from the two scenarios in #2 above to re-evaluate the capital project from the Module 2 Capital Budgeting Project (i.e. discount the cash flows from the Capital Budgeting Project using the two new rates). Indicate your recommendation whether to move forward with the project under each scenario.

4. Using information obtained from FactSet, describe the company's payout policy. Include a discussion of the types of payout and recent trends. Which of the payout policy theories/factors discussed in the readings are relevant to your company's situation? Explain.

Note - Read it carefully because the question was asking question from the Module2 and Module3 which is attached.

Attachment:- Corporate Finance Assignment Files.rar

Verified Expert

Net present value of the project is calculated by deducting the present value of cash outflow from present value of cash inflow.In addition to this the capital structure of the company can be defined as the mix of debt and equity and there are various capital structure theory which needs to be applied by the company.The weighted average cost of capital can be termed as the cost of capital of the company and it is determined by the market not by the management of the company.

Reference no: EM132358286

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len2358286

8/17/2019 12:08:19 AM

Please answer the assignment titled Final Project. Read it carefully because the question was asking question from the previous assignment Module2 and Module3 which is attached to the file section. Answer all the questions that is ask on the assignment. I will attached the financial statement and supplemental information to the message box. Use the General Motor company on question number 1. Then refer the company according to what module is ask from the question assignment, module 3 or module 2.

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