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Question -

The board of Directors has asked you to design the capital structure of the company. Explain any sin factors that you would consider while doing so. [6]



Answer -

For design the capital structure of the company six factors are as following:-
1) Cash Flow Position.
2) Interest coverage ration(ICR)
3) Debt Service coverage ratio(DSCR)
4) Return on investment (ROI)
5) Cost of debt
6) Tax rate.

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