1 Corporate Finance Capital Structure Javier Estrada Spring, 2014 1. Introduction • Where are we going? 2. Tonka • Implications • Limitations 3. Polaroid • Costs of financial distress • Agency costs and covenants • Implications Javier Estrada IESE Business School Barcelona Spain MBA CorpFin Spring, 2014 Introduction What is this all about? Go Finding the best (cheapest) way to finance the long‐ term projects of a company • What financial instruments, and in what proportions, minimize the company’s cost of capital? • Optimal capital structure x D and x E (or D/E) that minimize the WACC We will do this in two steps The positive side of debt • The limitations of the set‐up The positive and negative sides of debt • The process of finding an optimal capital structure Go
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Corporate Finance Capital Structure - IESE · Corporate Finance Capital Structure Javier Estrada Spring, 2014 1. Introduction • Where are we going? 2. Tonka • Implications •
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