Module 2.4: Capital Structure and Value of the Firm

It is not how a telecommunications company is expanding and being competitive in the market but its capital structure and value matters a lot.

This is the last chapter in module 2. It is important that the learner understands the need for a firm to have an optimal capital structure for the firm’s survival and the implications of the various financing choices to the cost and return to the firm and shareholders.

Chapter Learning Objectives

• Be able to assess the value the firm using different valuation methods
• Understand the effects of equity financing and gearing on the value of the firm.
• Link the value of the firm and cost of capital

Chapter Learning Outcome
After completion of this chapter, the learner should be able to appreciate the importance of the optimal capital structure of the firm using different financing options. He/she should also be able to understand the need to have adequate financing of a firm.
Sessions covered are:

Session 1: Introduction to Capital Structure
Session 2: Share Capital Valuation
Session 3: Bond Valuation