Capital Structure

Question 1

WAAC

Answer 1

Wdx kd ( 1- tax rate ) +wexkd

Question 2

Target capital structure

Answer 2

That minimizes WAAC

Question 3

What influences the proportion of debt in capital structure

Answer 3

1 growth and stability of revenue
2. Growth and predictability of cash flow
3. Amount of business risk
4. Amount of liquidity of company assets
5. Cost and availability of debtfinancing
6.non cyclical nature of business
7.low fixed operating cost or low operating leverage
8. Companies with subscription based revenue.