Question: a) What is optimum capital structure? Briefly explain the primary factors those influence the capital structure decisions of a firm. b) The balance sheet


a) What is optimum capital structure? Briefly explain the primary factors those 









a) What is optimum capital structure? Briefly explain the primary factors those influence the capital structure decisions of a firm. b) The balance sheet and the income statement for 2020 of Dulal Corporation are as follows: Balance sheet on 31/12/2020 Current assets Tk. 3,00,000 Debt Tk. 0 Net fixed assets Total Assets 14,00,000 17,00,000 Common equity 17,00,000 Total liabilities and equity 17,00,000 Income Statement on 31/12/2020 Sales Fixed cost Variable costs EBIT Taxes (40%) 12,00,000 (1,30,000) (7,50,000) 3,20,000 (1,28,000) Net Income 1,92,000 When the firm finances 50% of its capital with debt it incurs the cost of 12%. Based on the above information show the effects of leverage on EPS with your comments when I. D/A = 0% II. D/A = 50 c) Referring to the question no. b calculate the DOL, DFL, and DTL and comments on your results.

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