It has been over 60 years since Franco Modigliani and Merton Miller first proposed that a company’s value is independent of its capital structure

Title: CA2: Hand-up assignment

It has been over 60 years since Franco Modigliani and Merton Miller first proposed that a company’s value is independent of its capital structure—no matter how you slice it. Contemporary positions vary as to the importance of capital structure and how it impacts the value of the company. According to CNBC (Nov, 2018) “A $9 trillion corporate debt bomb is ‘bubbling’ int the US economy”, while the Financial Times (February, 2019) is reporting that “Companies in China owe more than the economics of the UL and Netherlands combined and that could have repercussions for the world economy”.

Required:

Take a publicly traded company/ case study of your choice. Examine the capital structure and discuss and evaluate the company’s approach to capital structure. Your response should include computations and literature underpinning.