Description
The purpose of this assignment is to explain core concepts related to business risk and recommend sound financial decisions based on analysis of a firm's capital structure and capital budgeting techniques.
Read the Chapter 15 Mini Case on page 626 in Financial Management: Theory and Practice. Using complete sentences and academic vocabulary, please answer questions a and b.
Using the mini case information, write a 250-500 word recommendation of the financial decisions you propose for this company based on an analysis of its capital structure and capital budgeting techniques.
APA format is not required, but solid academic writing is expected.
This assignment uses a rubric. Please review the rubric prior to beginning the assignment to become familiar with the expectations for successful completion.
Benchmark - Mini Case 6
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Running Head: MINI CASE 6
1
Mini Case 6
Name
Institution
Date
MINI CASE 6
2
Question a
Using the free cash flow valuation model, the value of a firm is calculated using the
formula below.
∞
V =∑
T=1
FCFT
(1 + WACC)T
Where; V stands for the value of the firm; T for the period; FCF for free cash flow and WACC
for the weighted average cost of capital (Brigham & Ehrhardt, 2017). Therefore, the value of the
firm is affected by the firm's capital structure through the effect of debt on free cash flow and...