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Optimal Capital Structure: Modelling debt & equity finance
The Modigliani-Miller capital structuring theorems have for a
long time dominated the thought process by which corporate and financial firms
optimise their value or the weighted-average cost of capital (WACC). With all the controversies and criticisms
that surround them, the concepts underlying these theorems have still managed
to become an integral part of the tools used by most financial institutions to
develop, market and sell their products.
This course aims to (1) explain the notion behind these theorems
in a simple and logical way, (2) demonstrate how their application differs in
respect to corporate and financial entities, (3) outline a robust methodology
for determining and locating the optimal capital structure and, finally, (4)
extend the optimisation procedure to the case where the firm faces
balance-sheet constraints. Interactive spreadsheet examples, relating to
hypothetical and real case studies, are provided for all the above