BUSI 1600 Lecture 11: Raising Capital
29 Mar 2017
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Document Summary
Raising capital involves two very important decisions: deciding on the capital structure of the business, accessing appropriate sources of funds. These classes will discuss key factors that determine a firm"s capital structure and describe the primary sources of financing available to small and medium-sized firms. Traditional financial theory suggests the optimal capital structure of a firm is determined by minimizing the weighted average cost of capital (wacc) Beyond the scope of this course to engage in a complete discussion of how to determine the wacc. Notwithstanding the imp of the wacc, should recognize a # of additional factors frequently determine capital structure, particularly in the case of small firms. The following six factors influence capital structure and financing decisions in smes: after tax cost interest is a tax deductible expense. As a result, entrepreneurs may be influenced to borrow money: availability entrepreneurs often have limited financing options.
