1) Business Risk and Optimal Capital Structure business risk and optimal capital structure of firm, tutor made following statement: Main factors that affect business risk are ability to adjust output prices and operating leverage and business risk is uncertainty regarding net income of firm. For levered firm 40/60 debt to equity ratio is optimal capital structure, which always maximizes value of firm. Do you agree or disagree with tutor’s statement? Briefly describe.
2) Rapidly growing small firm doesn’t have access to enough external financing to contain its planned growth. Describe what substitute company can consider to implement its growth strategy.
Describe what factors find out the firm's sustainable growth rate, describe why it is of interest to management, and find out the sustainable growth rate for firm with hypothetical ex.
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