•You should discuss the implications of the various capital structure theories for optimal capital
structure as they apply to your assigned company including:
o Trade-off theory
The trade-off between tax benefits of debt (including personal taxes and dividend
imputation credits (see Topic 8)) and the financial distress costs
The implications of the trade-off theory determinants (see Topic 6) of optimal
leverage for the optimal leverage of the firm.
•Analyses of the determinants should be both qualitative and quantitative.
You may incorporate stakeholder theory, agency theory and predation theory (see
Topic 7) along the trade-off theory determinants mentioned above in a broader
trade-off theory framework.
The analyses of the broader trade-off theory determinants should be detailed
and should form the bulk of your analyses of optimal leverage.
o Agency theory
o Stakeholder theory
o Predation / Product market completion theory
•You should determine the optimal leverage or optimal leverage range of the firm and whether the
firm should increase, decrease or maintain its current leverage.
•You should also suggest how and when any recommended leverage change should be
implemented•You should discuss the implications of the various capital structure theories for optimal capital
structure as they apply to your assigned company including:
o Trade-off theory
The trade-off between tax benefits of debt (including personal taxes and dividend
imputation credits (see Topic 8)) and the financial distress costs
The implications of the trade-off theory determinants (see Topic 6) of optimal
leverage for the optimal leverage of the firm.
•Analyses of the determinants should be both qualitative and quantitative.
You may incorporate stakeholder theory, agency theory and predation theory (see
Topic 7) along the trade-off theory determinants mentioned above in a broader
trade-off theory framework.
The analyses of the broader trade-off theory determinants should be detailed
and should form the bulk of your analyses of optimal leverage.
o Agency theory
o Stakeholder theory
o Predation / Product market completion theory
•You should determine the optimal leverage or optimal leverage range of the firm and whether the
firm should increase, decrease or maintain its current leverage.
•You should also suggest how and when any recommended leverage change should be
implemented•You should discuss the implications of the various capital structure theories for optimal capital
structure as they apply to your assigned company including:
o Trade-off theory
The trade-off between tax benefits of debt (including personal taxes and dividend
imputation credits (see Topic 8)) and the financial distress costs
The implications of the trade-off theory determinants (see Topic 6) of optimal
leverage for the optimal leverage of the firm.
•Analyses of the determinants should be both qualitative and quantitative.
You may incorporate stakeholder theory, agency theory and predation theory (see
Topic 7) along the trade-off theory determinants mentioned above in a broader
trade-off theory framework.
The analyses of the broader trade-off theory determinants should be detailed
and should form the bulk of your analyses of optimal leverage.
o Agency theory
o Stakeholder theory
o Predation / Product market completion theory
•You should determine the optimal leverage or optimal leverage range of the firm and whether the
firm should increase, decrease or maintain its current leverage.
•You should also suggest how and when any recommended leverage change should be
implemented
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