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ASHA 777 [7]
2 years ago
9

Match the factors to the target capital structure preferred.

Business
1 answer:
disa [49]2 years ago
8 0

The target capital structure and the companies that prefer them are:

Equity Capital structure:

  • Managers with a conservative management style.
  • Companies not in a position to provide collateral.
  • Companies want to show a high credit rating.

Debt Capital:

  • Companies with high growth rate.
  • Businesses in the growth stage.
  • Fast-growing companies like software.

<h3>What drives companies to pick either debt or equity?</h3>

Companies that are conservative and want to have high credit ratings will not employ debt as much because it is risky. Companies that cannot give collateral for debt also prefer equity.

Companies that are growing on the other hand, prefer to go for debt because they have the capacity to pay it off.

Find out more on the decision between debt and equity at brainly.com/question/24322461.

#SPJ1

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Answer:

Here the required rate of return is 14%.

Explanation:

Required rate of return can be defined as the minimum rate of return that an investor will accept for holding a company's stock, as a compensation for the risk which is associated with that stock. This concept is also used in corporate finance , where with the help of this profitability of an investment project is analyzed.

Formula for taking out required rate of return is -

Required rate of return = Risk free rate + Beta ( Market return - Risk free rate )

= 5% + 1.5 ( 11% - 5% )

= 5% + 1.5 ( 6%)

= 5% + 9%

= 14%

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Instead, a shift in the supply curve means that the quantity supplied of a product will change at every price level.

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