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Unformatted text preview: CASE10M Student Version 04/25/10 ASPEON SPARKLING WATER, INC. Capital Structure Policy This case illustrates the capital structure decision for a firm that begins with zero debt financing. The numerical analysis assumes that all cash flows are perpetuities. The model uses income statements to examine the effect of financial leverage on ROE and risk. Additionally, the model uses valuation equations to calculate the impact of debt financing on firm value and stock price. Note that the model extends out to Column H. Press CTRL A simultaneously to see a plot of debt level versus stock price and EPS. Press CTRL B simultaneously to see the effect of the tax rate on the optimal debt level and press CTRL C simultaneously to see the effect of changes in EBIT on the optimal debt level. Press any key to return to the spreadsheet. If you are using the student version of the model, some of the cells have been blanked out. Before using the model, it is necessary to fill in the empty cells with the appropriate formulas. fill in the empty cells with the appropriate formulas....
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This note was uploaded on 04/24/2010 for the course FIN 4414 taught by Professor Staff during the Spring '08 term at University of Florida.
- Spring '08