chap_13 - Chapter 13 LEVERAGE AND CAPITAL STRUCTURE SLIDES...

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Chapter 13 LEVERAGE AND CAPITAL STRUCTURE SLIDES 13.1 Key Concepts and Skills 13.2 Chapter Outline 13.3 Capital Restructuring 13.4 Choosing a Capital Structure 13.5 The Effect of Leverage 13.6 Example: Financial Leverage, EPS and ROE - I 13.7 Example: Financial Leverage, EPS and ROE - II 13.8 Break-Even EBIT 13.9 Example: Break-Even EBIT 13.10 Example: Homemade Leverage and ROE 13.11 Capital Structure Theory 13.12 Capital Structure Theory Under Three Special Cases 13.13 Case I – Propositions I and II 13.14 Case I – Equations 13.15 Case I – Example 13.16 Figure 13.3 13.17 The CAPM, the SML and Proposition II 13.18 Business Risk and Financial Risk 13.19 Case II – Cash Flows 13.20 Case II – Example 13.21 Interest Tax Shield 13.22 Case II – Proposition I 13.23 Example: Case II – Proposition I 13.24 Figure 13.4 13.25 Case II – Proposition II 13.26 Case II – Proposition II Example 13.27 Case II – Graph of Proposition II 13.28 Case III 13.29 Bankruptcy Costs 13.30 More Bankruptcy Costs 13.31 Figure 13.5 13.32 Conclusions 13.33 Figure 13.6 13.34 Additional Managerial Recommendations 13.35 Observed Capital Structures 13.36 Example: Work the Web 13.37 Bankruptcy Process – I 13.38 Bankruptcy Process – II 13.39 Quick Quiz
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A-157 LEVERAGE AND CAPITAL STRUCTURE CHAPTER WEB SITES Web sites may be referenced more than once in a chapter. This table just includes the section for the first reference. Chapter Section Web Address 13.7 yahoo.marketguide.com 13.8 www.sec.gov www.abiworld.org www.bankruptcydata.com What’s On the Web? www.amex.com www.quicken.com CHAPTER ORGANIZATION 13.1 The Capital Structure Question 13.2 The Effect of Financial Leverage The Impact of Financial Leverage Corporate Borrowing and Homemade Leverage 13.3 Capital Structure and the Cost of Equity Capital Business and Financial Risk 13.4 Corporate Taxes and Capital Structure The Interest Tax Shield 13.5 Bankruptcy Costs Direct Bankruptcy Costs Indirect Bankruptcy Costs 13.6 Optimal Capital Structure The Static Theory of Capital Structure Optimal Capital Structure and the Cost of Capital Capital Structure: Some Managerial Recommendations 13.7 Observed Capital Structures 13.8 A Quick Look at the Bankruptcy Process Liquidation and Reorganization Financial Management and the Bankruptcy Process Agreements to Avoid Bankruptcy
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CHAPTER 13 A-158 ANNOTATED CHAPTER OUTLINE Slide 13.1 Key Concepts and Skills Slide 13.2 Chapter Outline 13.1. The Capital Structure Question Lecture Tip, page 389: You might want to stress our lack of overall understanding when it comes to the optimal capital structure for a particular business. In his essay, “The Capital Structure Puzzle,” in the July 1984 Journal of Finance , Stewart Myers summarizes the issues concerning capital structure, specifically the “pecking order” theory and what we know about corporate financing behavior. It may be interesting to read Myers’ own words from the opening
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chap_13 - Chapter 13 LEVERAGE AND CAPITAL STRUCTURE SLIDES...

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