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Establishing a Capital Structure for a Firm Is Not Simple

question 54

Essay

Establishing a capital structure for a firm is not simple. Although financial theory guides the process,there is no simple formula. List and explain four main items that one should consider in determining the capital structure.


Definitions:

FICA Tax Rate

The percentage of social security and Medicare taxes that both employees and employers must pay, based on wages paid.

Wage Bracket

A range or category of income levels used to calculate tax withholdings or determine pay scales based on earnings.

Withholding Table

A chart or table used by employers to determine the amount of tax to withhold from an employee's paycheck based on earnings and tax status.

Interest-Bearing Note

A debt instrument that pays interest to the holder at a fixed or variable rate over a specified period.

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