Why Do Firms Choose Their Capital Structure - 1623 Words

1. Introduction In order to grow, an enterprise needs investments. So they need to start wondering about which securities to acquire and how to finance those investments: with equity, debt or a combination of both (Myers, 2001). The study of capital structure tries to clarify this variety of securities and financing opportunities. In accounting terms, this decision is situated on the right-hand side of the balance sheet (Myers, 2001). In his Capital Structure Puzzle article, Myers (1984) poses the question â€Å"How do firms choose their capital structure?†. But even today, there is no right solution to this question. In the literature, there are three central theoretical models: the tradeoff model, the pecking-order hypothesis, and the agency†¦show more content†¦There is no obligation of an effective repayment to the shareholders and in return, the firm pays out a dividend to cover for the incurred risk. The amount of the dividend depends on the profitability of the firm. If the firm is not capable of paying out a dividend to its shareholders, this does not necessarily lead to bankruptcy. The other option firms have, is to use debt. Creditors invest money in the company, and the company has the obligation to repay an effective payment, with an agreed interest rate and maturity date (Proenà §a, et al., 2014). 2.1. Theories of capital structure The base for the modern capital structure theory comes from Modigliani and Miller (1958). They stated that it is irrelevant for a firm to choose between equity and debt in perfect and frictionless markets (Modigliani Miller, 1958). In those markets there are no taxes, perfect information disclosure of information and no transaction costs connected with the raise of money or going bankrupt (Chen, 2004). 2.1.1. Tradeoff theory Five years after their pioneering research, Modigliani and Miller relaxed the perfect market assumptions and added corporate tax decision to their models. Consequently, they found that an increase in debt levels will raise the value of the firm, because firms who finance their activities with long term debt experience a debt tax shield (Modigliani Miller, 1963). Modigliani and Miller (1963) do not show any evidence for bankruptcy

Congestion Of Congestion Based Fees - 1260 Words

Congestion, particularly in urban centers, has received much attention due to the resulting higher absolute travel times and lower travel time reliability, that lead to higher fuel consumption and significant environmental impacts. In response to the high congestion delays and costs, researchers and policymakers have studied the need and the implications of implementing congestion-based fees in a bid to alleviate congested network links and/or areas, and divert traffic as needed, temporally, spatially and modally, known as â€Å"triple divergence† (Downs, 1992). Proper evaluation of any congestion management strategy requires explicitly setting performance measures that can be used as indicators of how well the policy performs, and whether or not the initial goals are reached. Congestion pricing is a widely used policy aiming to mitigate congestion along heavily congested facilities. The rationale behind congestion pricing is that users are charged a toll fee in order to use the facility, in a bid to alleviate congestion and improve travel time along this facility, and/or collect revenue to be allocated in congestion-mitigation projects that would enhance the users’ experience and the system performance overall. There are different implementation schemes, depending on the level of sophistication that the agency wishes to achieve: unique vs. differentiated toll by vehicle type/class, fixed vs. dynamic toll rates based on the traffic conditions, tolled lanes in conjunction withShow MoreRelatedThe London Program Has Cut Congestion1675 Words   |  7 PagesThe London program has cut congestion from the original cordon by 20 to 30 percent (70,000 fewer cars per day), and by 14 percent in the western extension (30,000 fewer cars per day). There has been a 6 percent increase in bus ridership and a 12 percent increase in cycling journeys into the western addition during charging hours; and a 66 percent increase in cycling within the charging zone since it was introduced (Transport for London, 2009). As private vehicle traffic has dropped, some road spaceRead MoreThe Role of Membership Fees on Public Goods2563 Words   |  10 Pagesconsumption when a point of congestion is reached. The club theory proposes several solutions to enhance the optimal provision of the club good, which includes membership fees (Bchir and Willinger 2010, 26). In this case, membership fee is used as a tool to address issue around the provision of club goods. Private Goods Club Goods Common Resources Pure Public Goods High Low Table 1 CLUB GOODS: Clubs goods are justified to be formed based on consumer’s tasteRead MoreA Report On Southwest Airlines Essay1224 Words   |  5 Pagesservice allowed airlines to start service, and the use of airport infrastructure has been the source of competing interests and controversy. Southwest and its competitors have deliberately avoided the most congested hub airports and routes. The congestion is a major reason to why Southwest Airlines have not relocated their service to Dallas International airport. They have sought out to underserved city markets and secondary airports in the central urban areas. Nonetheless, the very success of thisRead MoreDelta Airlines : The Largest Operating Airline1458 Words   |  6 Pagesaffect Delta include additional fees, tax increase, congestion issues, and government failure to update ATC systems, extreme weather delays and laws of passenger’s privacy. The federal government has on several occasions proposed a significant increase in the per ticket tax and has recently proposed additional departure fees. A ticket tax increase or additional fees, if implemented, could negatively impact Delta’s results of operations. Proposals to address congestion issues at certain airports orRead MoreDelta Airlines : Effect Of Regulation1748 Words   |  7 Pagesaffect Delta include additional fees, tax increase, congestion issues, and government failure to update ATC systems, extreme weather delays and laws of passenger’s privacy. The federal government has on several occasions proposed a significant increase in the per ticket tax and has recently proposed additional departure fees. A ticket tax increase or additional fees, if implemented, could negatively impact Delta’s results of operations. Proposals to address congestion issues at certain airports orRead MoreEmerging Challenges in Airport Management2637 Words   |  11 Pagesbest possible way. Noticeable Challenges in Airport Management in this new era are : 1) Planning and Development of Airport Capacity. 2) Fundings for Airport Growth and Expansion. 3) Opportunities to cut costs. 4) Managing Airport Congestion. 5) Impact of Low Cost Carriers (LCC`s) to the aviation industry. 6) Impact of Environmental policies and regulations. 1) Planning and development of Airport capacity: Capacity refers to the ability of an airport to handle a givenRead MoreAccording to Mohr and Fourie (2004), the tax burden should be spread equitably among the various2200 Words   |  9 Pagespay principle be applicable. This is progressive in nature and is a fair system for the poor as everyone pays the relative to their income and earning ability. The ability to pay principle seems to be the fairest of the above as citizens contribute based on the earning ability. 2.3 Vertical and horizontal equity There are two notions on equity stemming from the ability to pay principle, the vertical the horizontal equity. According to Case et al (2014), horizontal equity is a principle wherebyRead MoreProblems Caused By Transportation And Transportation Essay2645 Words   |  11 Pagesissues of day today lives and one of the most used transport means in roadways. Road Transport majorly consists of the private passenger cars, which are generally used by only single rider thereby creating various problems like increase in traffic, congestions, increase in pollution and many others. So with this project undertaken, we aim at solving this problem by making the single drivers to share the private car thereby targeting the empty seats in their cars. Thus people belonging to the same areaRead MoreGlobal Warming And Its Effect On Earth s Atmosphere1491 Words   |  6 Pagestechnology to burn petroleum based products such as gasoline, it is a major contributor of the CO2 emissions to the atmosphere. As it mentioned in the above, CO2 as one the greenhouse gases is a major contributor to global warming [3]. b) Two types of travel demand management policies that can help to reduce the greenhouse gases from the transportation sectors are: Road Pricing: In general, terminology of the â€Å"Road Pricing† include all other pricing such as â€Å"congestion pricing†, â€Å"value pricing†,Read MoreProblems Associated With Road Transport2623 Words   |  11 Pagesissues of day today lives and one of the most used transport means in roadways. Road Transport majorly consists of the private passenger cars, which are generally used by only single rider thereby creating various problems like increase in traffic, congestions, increase in pollution and many others. So with this project undertaken, we aim at solving this problem by making the single drivers to share the private car thereby targeting the empty seats in their cars. Thus people belonging to the same area

Marks and Spencer free essay sample

The Airline industry operates in a fiercely competitive environment. Discuss how the industry utilises the theories of consumer segmentation and buying behaviour to respond to consumer demand. Use relevant examples to support and illustrate your arguments and research. 2. The Innocent Drinks Company has grown considerably from its early days of making its first smoothie recipes in 1998 employing only 3 people. Now it’s a successful company with a turnover of ? 75 million. Discuss how the marketing environment influences the marketing activities which companies like Innocent undertake. 3. Tesco is one of the world’s international retailers and is recognised as the market leader in the UK supermarket sector. Tesco state that their core purpose is ‘to create value for customers to earn their lifetime loyalty’. Evaluate how Tesco and other supermarkets utilise the marketing mix to compete in the marketplace. The music industry has changed dramatically in recent years. Using the 7 ps (price, product, promotion etc) as identified by the extended marketing mix,evaluate how the major players in the industry utilise the marketing mix to their benefit in modern marketing campaigns. We will write a custom essay sample on Marks and Spencer or any similar topic specifically for you Do Not WasteYour Time HIRE WRITER Only 13.90 / page Incorporate practical examples of marketing campaigns in your essay to support your evaluation. 5. The music industry operates in a fiercely competitive environment. Discuss how the industry utilises the theories of consumer segmentation and buying behaviour to respond to consumer demand. Use relevant examples to support and illustrate your arguments and research. Submission date:10th February 2012. Feedback: 10th March 2012. This will assess Learning Outcomes 1 and 2. It will also cover the following transferable skills A, B, C, E and K. Assessment Criteria Please note that diagrams, quotes, appendices and tables do not constitute part of the word allocation. The assessment criteria for this assignment will be: 25%Presentation and structure, which includes a concise written style,logical progression of arguments, and adherences to referencingconventions. Evidence of research, which includes the use of relevant examples which support and illustrate your arguments. 45%Analysis and conclusions, which includes a clear understanding and appreciation of the full implications of the conclusions reached. Assessment Criteria: Please check the generic assessment criteria for your year on Blackboard under ‘Admin. An individual report to the value of 2000 words on the following topic: â€Å"How is the increasing use of technology changing marketing in the 21st century? † This will assess all the Learning Outcomes. Submission Date: 23rd March 2012 Return Date: 23rd April 2012 Assessment Criteria 40%Presentation and structure. This includes a concise written style, utilisation of appropriate sub-headings and language, logical progression of ideas and adherence to referencing conventions; 20%Research, which includes the use of relevant academic references and examples of organisations which upport and illustrate arguments. A minimum of five separate academic sources must be used; 40%Analysis and conclusions, which demonstrate a clear understanding and appreciation of the main issues relevant to the report. Assessment Criteria: Please check the generic assessment criteria for your year on Blackboard under ‘Admin.

The Purpose Of This Paper Is To Discuss Marijuana And Compare Essays

The purpose of this paper is to discuss marijuana and compare both sides of the issue of legalizing marijuana. We have two factions fighting each other; one those who are pro-marijuana and those who are anti-marijuana. These two factions have been fighting on this issue on the halls of justice for years. Pro marijuana legalization groups such as the Physician's Association for AIDS Care, National Lymphoma Foundation argue that marijuana should be legalized in order to treat terminally ill patients. Among them are AIDS victims who find that marijuana stimulates their appetites so they can fight off dangerous emaciation; glaucoma sufferers who have used marijuana said it has prevented them from going blind, and cancer patients for whom it alleviates the severe nausea that is often accompanies chemotherapy and sometimes makes lifesaving treatment impossible. Due to all these lobbying groups which show substantial evidence that marijuana can be used as a prescribed drug. Also many advocates who are pro marijuana complain that morphine and cocaine are legal and are very dangerous drugs, that brings up the question why not legalize marijuana as medical drug which is proven to be less dangerous than cocaine and morphine. Lobbying groups in a San Diego, California , council committee unanimously voted to urge president Bill Clinton and congress to end federal restrictions against the use of marijuana for " legitiment medical use." City council women Christine kehoe said she wanted the city of San Diego "to go on the record we support the medical use marijuana.; marijuana can be a drug of necessity in the treatment of AIDS, glaucoma, cancer and multiple sclerosis." Many agencies which are anti marijuana such as Drug Enforcement Agency and police departments argue that marijuana shouldn't be legalized. These agencies believe that marijuana shouldn't be legalized because if marijuana is to become legal then thousands more patients using marijuana. Then people will raise the question why marijuana illegal at all if its a medicine. The main reason why the Drug Enforcement Agency doesn't want marijuana to be legal is because their is no hard core evidence that proves that marijuana is a effective drug as a medicine. In twenty years of research have produced no reliable scientific proof that marijuana has medical value. The American Cancer Society , American Glaucoma Society,the National Multiple Sclerosis, the American Academy of Ophthalmology, or the American Medical Association , say that their is no evidence that marijuana is a medicine. The agencies also argues that no other drug prescribed is smoked and that knew findings show that marijuana is acutely harmful to AIDS, Cancer patients because the active ingredient in marijuana acutely reduces the the bodies white blood cells which fight off infection. The Drug Enforcement Agency along with police departments all over the United States believe, with the legalization of drugs crime will increase due to a higher increase of pot users which will eventually become addicts and will still or kill in order to get their drugs. These are the main points and reasons why the Drug named marijuana shouldn't be legalized in the United States of America. Seeing booth sides of the issue I come to a conclusion that marijuana should be legalized in order to help people suffering from terminal diseases such as AIDS, Cancer and Glaucoma. Prohibition of marijuana over the past decades hasn't deminshed the demand of the drug in the United States. The use of marijuana has acutely went up due to the mass attention given to marijuana by rappers such as Cypress Hill who promote the use of marijuana as a social drug. But I believe that marijuana is here to stay in our society and is only going through the stages that alcohol had during the prohibition era. Marijuana will become legal due to the knew administration which is liberal and who's leader, president Bill Clinton who had acutely used marijuana during the nineteen sixties. Due to all these factors marijuana will become more widely accepted by the American people who will pressure congress to rewrite the laws on the drug marijuana. Now its only a matter of time before lobbying groups pressure the legislature to legalize it. Due to legalization many states will be able to grow marijuana as a cash crop, and the United States government will be able to tax marijuana and make revenue off it. The revenue made from marijuana will be in the millions which can be used for drug rehabs and anti drug programs targeted at elementary children. Still by seeing both sides of the issue I'm still one hundred percent pro marijuana because I use it socially and I believe its