Net Income Theory of capital Structure

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This lecture is delivered by Ms.Shaziya Naz, Asst. professor of biyani Girls College. The video is about Net income Theory of capital structure. Acc to this theory a firm can increase the value of the firm and reduce the overall cost of capital by increasing the proportion of debt capital in its capital structure to the maximum extent . Acc. To this theory value of the firm can be calculated by the following formula :

Total Value of the firm = Market value of Equity + Market value of Debt

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