NET INCOME APPROACH

Net Income (NI) Approach to Capital Structure (Numerical Problem)

by

Here are some of the numerical problem of Capital Structure from Net Income Approach. Numerical 1 A company, Alexa Ltd., has an EBIT of $120,000. The total capital is $1,000,000, with 60% equity and 40% debt. The cost of debt is 8%, and the equity capitalization rate is 10%.Calculate:1. Net income.2. Value of the firm … Read more

Theories of Capital Structure

by
THEORIES OF CAPITAL STRUCTURE

INTRODUCTION Capital structure refers to the combination of debt and equity sources of financing in the business. Capital structure is the mix of the long-term sources of funds used by a firm. It is made up of debt and equity securities and refers to permanent financing of a firm. Debt and Equity are used in … Read more