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Chapter 7

Financing – Capital structure

Outcome

By the end of this session you should be able to:

 evaluate the impact of changes in capital structure for an incorporated entity on
shareholders and other stakeholders

 understand the main capital structure theories (traditional theory, and Modigliani
and Miller (MM)’s theories)

 calculate the cost of equity or weighted average cost of capital (WACC) to
reflect a change in capital structure

and answer questions relating to these areas.

The underpinning detail for this chapter in your Integrated Workbook can
be found in Chapter 7 of your Study Text

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