Assignment Grading Rubric Course GB550 Unit 5

Assignment Grading Rubriccourse Gb550 Unit 5copyright Kaplan Univers

Complete the chapter-related problems: Chapter 9 problem 9–10, p. 389 and Chapter 10 problems 10–1 to 10–7, p. 427. Prepare this assignment as a Word document, listing each question followed by your answer. Submit through the Dropbox. For the final project, select a publicly held company and analyze its capital structure based on Chapter 15 principles, including a discussion of issues, risks, theories, criticisms, evidence, and estimation of the optimal structure. The report should be 5-7 pages of text, APA format, with at least four references. The final paper should assess the company's capital structure, reflecting depth, quality, and understanding of financial management practices and their impact on organizational decision-making.

Paper For Above instruction

The assignment at hand encompasses two distinct but interconnected tasks: solving specific financial problems from the textbook and conducting a comprehensive analysis of the capital structure of a selected publicly traded company, exemplified here by Apple Inc. The first task requires detailed solutions to the textbook problems, emphasizing the understanding of financial concepts such as valuation, cost of capital, and leverage, providing clear reasoning, calculations, and organized presentation in a Word document.

The second task involves a research-based corporate finance analysis, focusing on the capital structure—debt and equity mixture—of Apple Inc. The core objective is to evaluate how Apple’s financing decisions align with theoretical models, particularly Modigliani and Miller’s (MM) propositions, and how actual evidence supports or contradicts these models. The analysis should examine the impact of different factors such as business risk, tax considerations, and growth opportunities on Apple's capital structure, and whether its current mix maximizes shareholder value or could be optimized.

In the introductory section, the paper should provide a preview of the significance of capital structure decisions in corporate finance, emphasizing their influence on a firm’s valuation, risk profile, and overall financial health. The subsequent sections should analyze Apple’s business and financial risks associated with its financing choices, highlighting how leverage affects its risk profile and return on investment (ROI). This includes considering Apple's specific industry context, operational stability, and growth prospects.

The discussion of MM’s capital structure theory should outline its assumptions, including perfect capital markets, no taxes, and no bankruptcy costs, along with its core propositions—namely that, in an idealized world, a firm’s value is unaffected by its capital structure. Following this, the paper must critique the model’s realism, addressing its limitations, such as market imperfections, taxes, bankruptcy costs, and asymmetric information. This critique will underscore the gaps between theory and practice.

Empirical evidence on Apple’s actual capital structure should be examined, considering how the company’s debt and equity ratios influence its valuation, cost of capital, and risk, supported by recent financial data and studies. The implications of this evidence for corporate decision-making should be synthesized, addressing whether Apple’s current structure aligns with optimality or if adjustments could enhance firm value.

Furthermore, the paper must estimate Apple’s optimal capital structure by analyzing industry benchmarks, company leverage ratios, and theoretical models, integrating insights from scholarly research. The discussion should consider factors influencing the capital structure, such as business risk, tax benefits of debt, flexibility needs, managerial conservativeness, and growth opportunities. For example, Apple's substantial cash reserves and strategic financing choices reflect its adaptive approach to these factors.

The conclusion should summarize key findings, reflecting on the importance of capital structure decisions in maximizing shareholder wealth. It should also suggest potential strategic adjustments based on theory and evidence, aiming to optimize Apple’s leverage and equity mix in future periods.

Lastly, the paper must adhere to APA style guidelines, include at least four credible references—comprising scholarly articles, financial reports, and authoritative texts—and demonstrate critical understanding and analysis of corporate finance principles. This comprehensive approach ensures a detailed, well-structured analysis that effectively links theory with real-world corporate financial strategies.

References

• Baker, H. K., & Martin, G. S. (2011). Capital structure and corporate financing decisions: Theory, evidence, and practice. Wiley.
• Brown, G. M., Bernard, S. V., & Practising Law Institute. (2013). Securities filings, 2013: Practical guidance in a changing environment.
• Hitt, M. A. (2017). Strategic management: Competitiveness & globalization: concepts and cases. Cengage Learning.
• Lundholm, R. J., & Sloan, R. G. (2013). Equity valuation and analysis with eVal. McGraw-Hill Irwin.
• Stiglitz, J. E., & Rosengard, J. K. (2015). Economics of the public sector.
• Damodaran, A. (2010). Applied corporate finance. Wiley.
• Ross, S. A., Westerfield, R. W., & Jordan, B. D. (2019). Fundamentals of corporate finance. McGraw-Hill Education.
• Myers, S. C. (2001). Capital structure. Journal of Economic Perspectives, 15(2), 81-102.
• Modigliani, F., & Miller, M. H. (1958). The cost of capital, corporation finance, and the theory of investment. American Economic Review, 48(3), 261–297.
• Frank, M. Z., & Goyal, V. K. (2009). Capital structure decisions: Which factors are reliably important? Financial Management, 38(1), 1-37.