6.1, 6.2, 6.3,6.5, 6.6Assignment: Students must complete the weekly assignment(s).AlignmentPoints/AIE/GenericDiscussion QuestionWhat are the four fundamental factors that affect the cost of money? What are some economic conditions that influence interest rates? Include examples of how these economic conditions affect interest rates. 6.1, 6.2, 6.3Discussion QuestionHow can you apply WACC concepts to your personal finances? What is your personal optimal WACC?6.3Case VICase assignment provided by the professor. Submityour response for grading.6.1, 6.3, 6.4Version 1 May 2014
26BSA 554: Comprehensive Financial ManagementWeek 7: Capital StructureThis week, students will learn about the impact of capital structure decisions on the maximization of wealth to the stockholders. Operating leverage, break-even analysis, a review of capital structure theory, and the use of Hamada equations will all be covered. The value of operations and intrinsic stock price methods will also be reexamined.Learning ObjectivesAlignment7.1Determine a firm’s break-even point of operations.CLO17.2Use Hamada equations to determine the lowest WACC.CLO1, CLO2, CLO37.3Determine the value of operations and an estimated stock price using the constant growth formula.CLO1, CLO2, CLO3Required Learning Resources and Activities: Students must complete any resources activities listed inthis section as selected by the instructor.AlignmentPages/AIE/GenericRead Ch. 15 of Financial Management: Theory and Practice.7.1, 7.2, 7.3Video Review Viewfollowing Kahn Academy videos:“Basic capital structure differences” at -domain/core-finance/stock-and-bonds/company-statements-capital-struc/v/basic-capital-structure-differences“Price and market capitalization” at -domain/core-finance/stock-and-bonds/valuation-and-investing/v/price-and-market-capitalization7.1, 7.2, 7.3Assignments From the TextComplete the following assignments from the text: 7.1, 7.2, 7.3Version 1 May 2014
27BSA 554: Comprehensive Financial ManagementCh. 15: Question 15-1 and Problems: 15-7, 15-9, 15-10, & 15-11Submit the assignment for review by your instructor.Assignment: Students must complete the weekly assignment(s).AlignmentPoints/AIE/GenericDiscussion QuestionWhat is business risk? How can it be measured? How does it arise? How is business risk similar to anddifferent from to financial risk and how it arises?7.1Discussion QuestionHow does the MM theory with corporate taxes lead to the use of 100% debt in the capital structure?7.2In order to complete the Final Major WACC Project by the due date in Week 10, students should have completed the following activities bythe end of this week:Obtained the company’s 10-K report containing key information, such as the overall corporate tax rate for use in the pre- and post-tax debt costs.