Chap016 capital structure-basic concepts.pptVIP

* The cash flow to all stakeholders is made up of cash flow to stockholders plus cash flow to bondholders. 16-* Capital Structure: Basic Concepts Chapter 16 Copyright ? 2010 by the McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin Key Concepts and Skills Understand the effect of financial leverage (i.e., capital structure) on firm earnings Understand homemade leverage Understand capital structure theories with and without taxes Be able to compute the value of the unlevered and levered firm Chapter Outline 16.1 The Capital Structure Question and The Pie Theory 16.2 Maximizing