Order ID	53563633773
Type	Essay
Writer Level	Masters
Style	APA
Sources/References	4
Perfect Number of Pages to Order	5-10 Pages

Description/Paper Instructions

Post 1 :

Paige Lane posted Feb 9, 2022 1:44 PM

Hello Class and Professor,

How does a firm’s capital structure relate to your personal capital structure?

A firm’s capital structure is its financial mix of equity and debt. Firm’s need capital structure for daily operations to work toward the strategic goal of maximizing a firm’s value. This is related to personal capital structure because personal finances include a mix of equity and debt.

In what ways are they similar?

A firm’s capital structure and personal capital structure are similar. The first way they are similar is through an assessment of risk. Before a firm or a personal can increase the amount of debt in their capital structure, the lenders assess the risk. For a firm this would be an assessment of the firm’s risk before approving a business loan. For an individual, their risk would evaluate the risk using a credit score before getting approved for a personal loan such as a car or housing loan. Another similarity is each capital structure has a group of debt sources and a group of equity sources. These sources provide the financing a firm or individual need for daily operations or activities. A final similarity is that these firms and individuals will likely put money down before raising more capital.

Provide examples of how you use debt and equity in your personal financial life that parallels the basic capital structure decisions made by a firm.

An example of how I use debt and equity in my personal financial life that parallels the basic capital structure decisions made by a firm would be when I purchased my first new car. When getting my car, I was a new college student with no credit history and a small amount of assets. Because of this, increasing my debt was a risk to myself, but the dealership viewed me as a high-risk individual as well. Before getting the loan, I had to put money down and accept a high interest rate, acting as the premium for being a high risk for the dealership. At this point, I had to assess the risk of investing in this large purchase. Overall, I concluded purchasing Overall, I concluded purchasing this car was essential for my job and education, making the benefits outweigh the risk.

This parallels the basic capital structure decisions made by a firm because a firm with a concerning amount of debt would be viewed as high risk and would need to pay a premium to any lenders to compensate for this risk. The firm would then need assess the project, its benefits, and how it would increase the value of the firm before taking on the additional debt if they chose not to increase equity by raising capital through issuing stock. If the firm concludes the project would be beneficial to the firm’s value, the benefits will outweigh the risk thereby making the premium expense worth paying.

Best,

Paige

Post 2:

Adam Wilcox posted Feb 10, 2022 5:56 PM

The Firm’s and Your Personal Capital Structure

1.  How does a firm’s capital structure relate to your personal capital structure?

My personal capital structure doesn’t include much equity, so the majority of my financing is done through debt. If equity equals assets minus liabilities (Rollenhagen, n.d.), I have equity in the form of the market value of my assets. I can sell them and make cash. My income adds cash flow, so that helps a lot, but it is not enough. It is good that I can take on debt to pay for the things I want and need, and I’m awarded with good credit when I meet the criteria, which motivates me more to do the right thing. A firm’s capital structure has far more equity than I do because they are so large. Plus, if they are a corporation, they have shareholders which can add tremendous wealth to their capital structure.

2.  In what ways are they similar?

My capital structure is similar to a firm’s in that we both have debt. Debt is necessary to get by in the world if you want to get lots of goods and services now instead of later. It speeds up the economy and people’s growth, so there’s more prosperity faster. If the money is used wisely there will be fewer problems, and both I and a firm have to deal with systematic risk like the economy, political climate, and social climate that are hard to impossible to control.

3.  Provide examples of how you use debt and equity in your personal financial life that parallels the basic capital structure decisions made by a firm.

I’ve never used home equity, and all my cash has come from income and issuing debt. My whole capital structure consists of debt, unless you count the equity that results from subtracting my liabilities from my assets. I could sell a bunch of my stuff and make cash, but that’s not as liquid as I like it. It is hard to find buyers in the first place, let alone someone who’ll give you a good price. Both I and a firm have to plan our finances and decide what to do with our money through budgets, so there are some similarities. But I’m puny compared to them.

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Use of Sources (worth a maximum of 20% of the total points). Zero points:  Student failed to include citations and/or references. Or the student failed to submit a final paper. 5 out 20 points:  Sources are seldom cited to support statements and/or format of citations are not recognizable as APA 6th Edition format. There are major errors in the formation of the references and citations. And/or there is a major reliance on highly questionable. The Student fails to provide an adequate synthesis of research collected for the paper. 10 out 20 points:  References to scholarly sources are occasionally given; many statements seem unsubstantiated.  Frequent errors in APA 6th Edition format, leaving the reader confused about the source of the information. There are significant errors of the formation in the references and citations. And/or there is a significant use of highly questionable sources. 15 out 20 points:  Credible Scholarly sources are used effectively support claims and are, for the most part, clear and fairly represented.  APA 6th Edition is used with only a few minor errors.  There are minor errors in reference and/or citations. And/or there is some use of questionable sources. 20 points:  Credible scholarly sources are used to give compelling evidence to support claims and are clearly and fairly represented.  APA 6th Edition format is used accurately and consistently. The student uses above the maximum required references in the development of the assignment. Grammar (worth maximum of 20% of total points) Zero points:  Student failed to submit the final paper. 5 points out of 20:  The paper does not communicate ideas/points clearly due to inappropriate use of terminology and vague language; thoughts and sentences are disjointed or incomprehensible; organization lacking; and/or numerous grammatical, spelling/punctuation errors  10 points out 20:  The paper is often unclear and difficult to follow due to some inappropriate terminology and/or vague language; ideas may be fragmented, wandering and/or repetitive; poor organization; and/or some grammatical, spelling, punctuation errors 15 points out of 20:  The paper is mostly clear as a result of appropriate use of terminology and minimal vagueness; no tangents and no repetition; fairly good organization; almost perfect grammar, spelling, punctuation, and word usage. 20 points:  The paper is clear, concise, and a pleasure to read as a result of appropriate and precise use of terminology; total coherence of thoughts and presentation and logical organization; and the essay is error free. 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The paper has slight errors within the paper. This can include small errors or omissions with the cover page, abstract, page number, and headers. There could be also slight formatting issues with the document spacing or the font Additionally the paper might slightly exceed or undershoot the specific number of required written pages for the assignment. 10 points: Student provides a high-caliber, formatted paper. This includes an APA 6th edition cover page, abstract, page number, headers and is double spaced in 12’ Times Roman Font. Additionally, the paper conforms to the specific number of required written pages and neither goes over or under the specified length of the paper.

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