NET OPERATING INCOME (NOI) APPROACH Homework Help

NET OPERATING INCOME (NOI) APPROACH

Another theory of capital structure, suggested by Durand2, is the Net Operating Income Approach. This Approach is diametrically opposite to the NI Approach. The essence Approach is that the capital structure decision of a firm is irrelevant. Any change in leverage not lead to any change in the total value of the firm and the market price of shares as well, overall cost of capital is independent of the degree of leverage.

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