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Describe in detail how a portfolio can be changed to reduce taxes. Give an example to support your argument.
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Solved in 2 steps
- a. Explain with hypothetical example the effect of Investment Tax Credit.What is capital budgeting? Compare the advantages and disadvantages of various capital budgeting techniques. Do you think NPV is the best decision criterion and it can overcome the problems inherent in other methods? Justify your answer.Explain what is meant by the required rate of return and include an example.
- From a financial perspective, how are projects chosen when capital rationing exists? Do you think capital rationing is fair or not?Describe that the Capital Asset Pricing Model (CAPM) tells us and how to use it.Explain with examples if you can what's meant by this theory briefly Capital Structure Theory
- Discuss the main features of Capital Asset Pricing Model (CAPM) and comment on the validity of the model in the real world.2. Capital Budgeting. (Essay) a. Briefly define what is Capital Budgeting, b. Provide a summary on the needs and importance of Capital Budgeting.SECTION B Answer all the questions below:. B1) Do you think capital budgeting is important? Justify? B2) List all the techniques of Capital Budgeting? You think are relevant today? B3) Do you think that these techniques are really helpful to financial managers? B4) Do you think that these techniques can be used in situations like COVID-19? B5) According to you which technique is better and why?