The Sociological Aspects Of The Media And Popular Culture...

The media influences how people experience social life. Media such as newspaper, television and film, are important sources of information, education and entertainment. It can be used to learn more about the world and the people in it. In this regard it can be said that the media represent, interpret and endorse aspects of social experience (O’Shaughnessy and Stadler, 2005). The media are also implicated in social regulation, or in other terms, the government of society. The media are implicated in government and politics in an obvious way because modern systems of democracy are conducted through the media. But the media have a bigger role to play in government by structuring how society is controlled and maintained. In addition, while†¦show more content†¦Innovations such as FaceBook and MySpace combine images, text, and messaging to create new possibilities for social interaction. Websites such as YouTube combine broadcast media with the self-directed properties of the internet. SMS texting has revolutionised the social lives of many people. All these media allow people to sustain relationships across time and space in ways that have never before been possible. Some are concerned however, that over-reliance on such forms of communication reduces the importance of face-to-face social experience. Others argue that such media present new ways of defining our identities and establishing new kinds of social interaction (Castells, 2000). Since its introduction on a public scale in the 1990s, the internet has been associated with many changes in social experience. Many aspects of social life such as education, work, commerce and even personal relationships have changed through the internet. However, researchers have found that, at least in the early years, access to the internet is shaped according to gender, class, ethnicity and education. During the 1990s the typical information technology user was a white, male, professional with a background in IT. This bias in internet access was named the ‘digital divide’ to point out the implied social inequalities. It was said that the internet wasShow MoreRelatedA Study on American Popular Culture892 Words   |  4 PagesAmerican Popular Culture Culture and Popular Culture Popular culture is consumed through interaction in the social media that includes television programs, movie theaters and virtual social networks. From the media, interests lie in the political developments and discussion concerning governance. These media satisfy appetite for political information while guiding an understanding on the national issues and choices made. Culture is the complex whole including customs, law, morals, belief,Read MoreFormal Reference Tools On Young People1002 Words   |  5 Pagesof youth culture, this encyclopedia looks at several categories of adolescent research. Topics include identity and development, relationships, social contexts, and mental health. 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Leadership and Organizational Behavior Case Study - 924 Words

Part I: Group Development The stages of group development are: 1. Forming: This is where the group that has been chosen or formed would come together, get to know each other and initially form their group. 2. Storming: Conflicts begin over the tasks they must perform as well as the others they must work with, in the group, as well as what their standing is within the group. 3. Norming (initial integration stage): The group now comes together and starts a good balance without the turmoil from the previous stage. 4. Performing (total integration stage): Working together well now and will be able to be effective in meeting its objectives. 5. Adjourning: When the task/objective is completed, the group will separate and move on. When†¦show more content†¦group meeting dates not attended, emails sent or received, phone call attempts). 3) Ask for resolution possibilities, or help with how to deal with the situation. 4) Possibly change the grading structure if the professor will allow. 5) Speak with Mike about the resolutions that were the result of the meeting with the professor so that he is fully aware of what is going on with the case study project. Part IV: Reflection The outcome of the group project wasn t mentioned, as to whether Mike ever turned in his portion, or how the group actually did grade wise, so it is hard to fully evaluate Christine as a group leader. I will say from what was written in the case study, Christine didn t seem very organized and didn t seem to have great communication skills with all of the group members. She didn t stay firm with Mike on meetings and objectives and let him use excuses to not do his work. Class group projects can be very difficult, but I think overall Christine did well with most of the members but to be effective you need to lead all members well and the project needs to be completed and should beShow MoreRelatedMGT 312 Entire Course1103 Words   |  5 PagesMGT 312 Entire Course    MGT 312 Week 1 Knowledge Check Study Guide    MGT 312 WEEK 1 Organizational Behavior Paper       Write  a 700- to 1,050-word paper explaining the role and purpose of organizational behavior. Explain the main components of organizational behavior.  MGT 312 WEEK 1 Organizational Behavior Paper Provide examples of how these organizational behavior components relate to your workplace. How will knowledge of organizational behavior benefit you as a manager? 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Revisiting Cost of Capital in Commercial Banks Free Essays

string(77) " and also affect the decision making of the Mangers regarding their capital\." CHAPTER 1: INTRODUCTION 2 Background Capital Structure decision remains one of the corporate strategies to corporate managers because it affects firm’s value. This research is conducted within the commercial banks. In many research journals and articles the cost of capital is the expected rate of return of capital in investor’s investment. We will write a custom essay sample on Revisiting Cost of Capital in Commercial Banks or any similar topic only for you Order Now Weighted average cost of capital is considered as required rate of return in the company. Component of cost of capital are; long-term debt, preferred stock, and common stock. Each must have minimum return. We analyze from previous research articles that the banks should not focus on historical cost but on new cost, because in order to invest and rise, new cost of capital is used to make decisions. Level of interest rates, tax rates are two of the factors that affects cost of capital in the commercial banks. Interest rates apply on debt and equity. It is the most important factor for investors. Cost of debt affects by the level of interest rates and also the cost of equity. As described in many articles, if interest rates increases the cost of debt increases, which increases the cost of capital. So, the raising of capital delayed till interest rate become favorable. This shows how the interest rate can be a source effective measure of the cost of capital. Similarly, if the tax rates increases, the cost of debt decreases, which decrease the cost of capital as it affects the after tax cost. The cost of capital directly and totally linked with capital structure. Capital structure influence the value of the banks, firm, company potentially by reflects the financing strategy. And capital structure should consider tax strategies. We found from different articles that the most important capital structure decisions are when the expected tax rates goes higher. The basic function of capital structure is to minimize the cost of capital and risk. Interest is tax deductable. The deductibility of interest payments provides influence for value. Higher the tax rate, the greater impact of deductibility of interest potentially on the after-tax cost of debt. These are the proved facts that are evaluated in previous researches. According to this research we are trying to find what role these factors play in commercial bank’s capital structure. It is necessary for top management of any business institutions to ascertain the banks or firms relevant cost of capital. From the banks’ perspective, the cost of each source of capital reflects the level of return because it is affected by certain factors like tax rates, interest rates, dividends etc. as the time period changes, the level of return also changes. In its simplest form, the capital structure decision is the selection by firm management of debt-to-equity ratio for the firm. Cost of Capital is perhaps the most fundamental and widely used concepts in financial economies. Managers of banks or corporation and also regulators employ the weighted average cost of capital for investment decisions. The WACC and the tax rates are endogenous to the firm’s debt policy. The interest rates affect the cost of debt as increasing debt increasing interest payments. We also derive the sources of capital structure that which source is better for the commercial banks and how the interest rates, tax rates brings variation in the cost of debt and the dividends and growth rates affects the cost of equity that totally affect the weighted average cost of capital. Our methodology allows us to value the government tax rates and interest rates that affect cost of debt. We specify numerically the affects of the variations in the factor like interest rates, tax rates and dividends, thus providing useful conceptual framework for the tax and interest policy debates that influence cost of capital of debt and equity. Finally we come to analyze that cost of debt increase or decrease by variation in the interest rates and tax rates and that help in the estimation of WACC that show that whenever the WACC decreases, it results in an increase in the profit that is useful for any organization or commercial banks. . Problem statement (Revisiting the cost of capital in the commercial bank) The problem statement of this research proposal includes re-examine the cost of capital in commercial banking sector of Pakistan and also to evaluate the direct and indirect association of the factors that affects weighted average cost of capital and how this variation (inc rease or decrease) can affect the profit and also the capital structure -debt and equity- of the commercial banks. 2. Research objectives While doing research planning, we analyze that the cost of capital considers the factors affecting decision making. The following object of the research comes into play: ? We will find out the factors which creates the variation (increase or decrease) on cost of capital and their effect on the capital structure decision making. ? To analyze the after effects of these factors on capital structure. ? To examine up to how much extent they are controllable or not from bank’s perspective. 3. Significance The importance of this research paper is that, the relation between the different determinants of the costs of capital creates different impact on the different commercial banks by affecting capital structure of that commercial bank. We know that as the weighted average cost of capital decreases, it increases the profit n the Commercial Banks. Risk associated with cost of capital and capital structure taking needs to b looked at differently in the case of the commercial banking institutes. This research sheds new light on how the cost of capital computed in the case of commercial banks. Also the relationship between the cost of capital and capital structure is investigated. This research has another importance as banking system has a vital role to play in the economic development of a nation. A healthy economy requires a sound banking system. This research states that how banks applies different techniques that enhance their performance and also affect the decision making of the Mangers regarding their capital. You read "Revisiting Cost of Capital in Commercial Banks" in category "Papers" In this research, the main finding of the paper suggests that the commercial bank should focus on reducing the cost of capital that maximizes the profit. According to our findings, it is concluded that each banks has its policies of financing. Each bank takes decision of selecting capital structure for minimizing their cost, risk factor differently that occupies good financial position in market. Factors that have impact on cost of capital as well as on capital structure are tax rates, interest rates, dividends payout, risk of default and other like market fluctuation, corporate governance. This research plays a vital role by showing the significant contribution of Commercial Banks while equating debt to equity ratio. It also shows the understanding of the performance of Banks by evaluating weighted average cost of capital. The main findings of the paper suggest that private commercial banks should focus on reducing the cost of capital which can magnify the returns to their stockholders. Finally this research paper would also help the students in academics in understanding the relation between the factors and the cost of capital and also their after affects that create impact on the weighted average cost of capital. 4. Limitation Time constraint of this semester is the issue for this study as we have limited time in this semester as compared to the actual time required for the research. By being in banks we will acquire interviews approximately 15 -30 minutes with questionnaire because of the time given by the Mangers of Finance Division. The information given by the managers is also limited because it difficult for them to provide all necessary information as they are bound by the policies of the commercial bank. 1. 6 Report Structure Chapter 1 represents the introduction of research topic its background, problem statement, objectives of research that set, significance of this research and limitations. This chapter gives brief information about the topic pervious information, the scope of research and its benefits, the target of the research. And also provides the basic information that already conducted by different authors researchers. Chapter 2 deals with the literature review and conceptual framework. In this portion you will find the different views of different researchers related to this research topic cost of capital in commercial banks including capital structure importance its link with cost of capital, and factors that affect cost of capital. This portion also gives the direction and relevant information which is very helpful in proceedings the research. Conceptual framework helps in determining the relationships of factors with WACC. Chapter 3 provides the detail of methodology that is adapted to proceedings the research. This portion gives explanation of research type, method, sample size, instruments that is used in finding and collecting the data. Chapter 4 gives the analysis of data that is collected through the questionnaire, interviews and calculating the WACC of commercial banks that chosen with assumptions, and research findings that proves the hypotheses that is set. Chapter 5 includes the conclusion of research findings and literature review findings. Also gives the recommendations. Finally Appendix attach to our research that contain Questionnaire. CHAPTER 2: LITERATURE REVIEW AND CONCEPTUAL FRAMEWORK 1 Literature Review 2 Capital structure (Khadka 2005) has analyses in his research that the firms meet their operational needs by raising their funds and this can be done through the capital structure that involves the two major sources of debt and equity. There should be an appropriate balance between debt and equity as it has effects on the risk and return of the shareholders of the company. If there are reasonable proportions of debt and equity in the capital structure of the firm, it maximizes the shareholders wealth while minimizing the cost of capital and that could be considered as the optimal capital structure. (John J. Pringle, Jun. , 1974) Since banks are private economic units, it is reasonable to suppose that shareholder interests will influence, if not control, managerial decisions. Capital is an important managerial decision variable and that it plays an important role in the financial management of the individual bank. Groth 1997) said that the selection of capital structure affects the cost of capital. Carefully selection of capital structure is more important. Banks and companies consider more conservative capital structure with sensitivity to cyclical effects of economy. It involves in dividing not in sharing. If payments of dividend are not deductible and if interest is tax deductible on debt then capital structure is important. Barton and Gordon (1987) Financing and capital structure choices are among the several key decisions made by firm managers. Yet the study of these questions has been generally neglected by strategy researchers. Several scholars have noted that the issues involved are concerned with fundamental choices ‘which should support and be consistent with the long- term strategy of the firm. Balakrishnan and Fox (1993) said that by selecting suitable financing, a ‘firm’s ability to manage its relationship with lenders thus becomes a key source of competitive advantage. Capital is a critical resource for all firms, the supply of which is uncertain. This uncertainty enables the suppliers of finance to exert ontrol over the firm. Stearns (1986) and Mizruchi (1993) estimate the cost of equity capital use a dividend discount model (DDM) methodology and earnings estimates. They find that the cost of equity capital for large U. S publicly traded companies ranged between 10% and 12% during 1979-1995, depending on the assumptions used with the DDM approach. Interestingly, Myers and Borucki (1994) obtain t he same range of estimates for the cost of equity capital of a limited sample of U. S. utility companies using a DDM-type method. Bruner (1998) and Weaver(2001) surveying large corporation and confirm about WACC methodologies. Both authors find that there is a significant difference exists in estimating the equity capital component of the firm. Some uses CAPM while other uses different methods. 4 Cost of capital Cost of capital is the minimum required rate of return by investors in firm’s securities. It occupies an important role in the theory of financial management and in the investment decision making as it provides criteria for allocation of the capital that what a firm pays for its capital like debt, preferred stock and equity. Cost of Capital is related with the level of risk associate with existing and new assets and investments. (Khadka 2005) Modigliani and Miller (1958) proved that firms cost of capital is independent of capital structure as it has no effect on the capital structure. The traditional belief of Modigliani and Miller (1963) is that the cost of capital can affect capital structure as in this belief they said that the personal taxes may include that brings variation in the cost of capital and hence affects the capital structure of the company. Khadka 2005) states that there is an empirical relationship between the cost of capital with capital structure, the size of the firm, growth of the firm, dividend payout ratio and liquidity of underdeveloped economy like Nepal but the major focus was the relationship of the leverage with the cost of capital where he conclude that negative beta shows that there is a negative relationship of cost of capital with the leverage as cost of capital decreases with the use of the leverage and this is done by the tax deductibility of the interest charges in the Nepalese firms. Cost of capital is the expected rate of return of capital in investor’s investment. On debt, the amount of interest is paid is called cost of debt. Whereas cost of equity is equivalent to the risk free rate of interest plus risk premium for business risk. (Groth 1997). 5 Factors that affects cost of capital Groth (1997) further said that risk is one of the factors that affect the cost of capital which determines the expected risk of cash flow in the asset side of the bank. Business risk is that when bank and companies cash flow are not able to meet its operating expenses. Risk is linked to economic changes. And it would be at risk to business risk when change in economy occurs and when financing is done by totally with equity. Cost of equity influenced by business risk. Equity holder’s risk has not accepted by the creditors and preferred stock holder if present. If increase in business risk occurs then it decreases the financial risk and the optimal D/E ratio, and increases the cash flow uncertainty of asset side. Financial risk is that when bank and companies cash flow are not able to meet its financial obligations. If firm finances through debt, then it has financial risk. Tax rates and interest rates are also factors. Interest payment expected deductibility give opportunity for value. If the tax deductibility is realized by the company then stockholders get the expected benefit of the tax deduction. Jorgenson and Landau (1993) or Bond and Devereux (2003) analyses that the government’s choice of the corporate tax rate is an important factor with respect to the investment decision made by shareholders and it is well known that the existence of corporate taxes distort this investment decision away from the social optimum . John J. Pringle, Jun. (1974) said that the traditional function of risk-bearing, capital is important in adjusting the maturity structure of liabilities. Risk is a function of uncertainty regarding future events, e. g. , earnings, losses on loans and securities, fluctuations in deposits, conditions in the financial markets, etc. Cost of equity increases if the financial risk become high. The cost of equity and debt increases wit h the increase in debt. The deduction of tax and its benefit is an expected benefit, to allow deduction of interest; the pre-tax EBIT income must be large. On after tax cost of debt, there is the greater the impact of interest deductibility, if the tax rate s higher. John R. Graham, (2003) analyze that the appropriate cost of capital in the presence of personal taxes does not depend directly on either the dividend payout rate or the tax on dividends. Equity shares have a market value lower than the difference between the reproduction cost of a firm’s assets and the market value of its debt obligations. Because of this capitalization, it need not be true that an economy without risk or uncertainty would have no equity financing. Groth (1997) said that asymmetry of effects is that the expected return to stockholder will goes up, if in place of some equity; some debt is used. The good or bad leveraging effects are asymmetry if interest is tax deductable. The inability to realize the interest deduction result in an asymmetry effect on expected return to stockholder. Weighted average cost of capital become low with the cost of capital high, if the debt capital increase in proportion. Cost of equity increases with the cost of debt. If the cost of components high the weighted average cost of capital increases and reason is that shareholder prefer to use of debt when expected value of tax benefit is attractive as compared to the added financial risk associated with the debt. The Demanded rate of increase in cost of debt and equity, effects on value of the expected increase in tax benefit of using more debt. Interest rate affects the cost of debt. It involves the risk components that have the probability of default on the debt. Meziane (2006) in his article said that a company pays interest which is treated as an expense for tax purpose and therefore it is tax deductable. Company will be bankrupt, if default on payment of interest to bank present by company. Equity financing cannot create a tax advantage because dividends are paid after interest and tax. Interest is paid on debt before tax deduction, whereas, dividend is paid after tax benefit. So, the cost of equity is high then cost of debt. Debt financing becomes attractive when tax is deductable from interest. Banks use cost of capital for decisions, a weighted average interest on debt. Bank should select D/E ratio for which the cost of capital fluctuate with the degree of debt finance is minimized. The D/E ratio is considered as one of the way of financing. (Alan J. Auerbach, aug. 1979). William F. Coffin and Sean Collin (2006) said that in the mid of 1990, a trend towards higher B/S debt in which low cost interest rate, lending level reduced by commercial banks and increase payback period for borrowers, a stable banking system. Cost of capital become low that could lower by the management in down market through viewing current corporate governance themes, taking action on giving management training with respect to capital market issues of today and advanced planning to identify the potential investors. Cost of capital and Corporate Governance Ramly and Rashid said corporate governance is also the factor that affects the cost of capital. CG directly affects the cost of equity, And indirectly with beta. This means poor performance of manager created through weak rights, thus increase cost of capital. Strong (weak) shareholders right associated with increase (decrease) cost of eq uity capital. CG generate liquidity problem in which investor high the sell price and decrease the buy price which can high the transaction cost and also affects the COEC. Thus, the CG creates strong mechanism on COEC and provides positive shareholder value for firm. It has also reducing effects on cost of capital. Banks and other financial institutes have negative influence on CG. Hennart, (1994) Both classes of suppliers (debt holders and equity holders) have governance abilities. The level of governance ability varies between the two and the optimal selection of the type of financing depends on the nature of resources of the firm. Seth, (1990) financing choices have the potential to affect performance by changing the level of governance costs. Importance and difficulties of WACC Denis Boudreaux (1995) in his article uses the buildup model for the cost of equity capital by estimating cost of equity capital for capital budgeting analyses. He said that whenever there is a need to determine the value of the firm, the cost of capital must be estimated. He said that the cost of debt of closely held firm is much higher that the publicly traded organization because of the loans or debt borrowed by the closely held firms including the commercial banks. He further said that the public traded firms have the low risk whereas a huge risk factor is involved in the closely held businesses. Experts have recognized that the exploitation of debt and equity can enhance the corporate value in 1940s. Later in the years, five concept developed on this area(1) early gearing leverage model; (2) the model of Modigliani and Miller (MM); (3) Capital Asset Pricing Model(CAPM); (4) Arbitrage Price Theory (APT); and (5) Gordon Model Shubbar and Alzafiri, (2008). Unless a firm can gain in excess of its cost of capital, it will not add value to its investor’s wealth. Company’s cost of capital is expressed by the weighted average of the cost of individual sources of capital employed. Bruner et. al. , (1998). For a firm using common stock (equity) and bond (debt) financing, with re and rd as the cost of equity capital and the cost of debt capital, the WACC is expressed the following equation: WACC = r = wd rd (1 ? t) + we re Where, wd (weight (proportion) of debt) = (value of debt/value of debt and value of equity), we (weight (proportion) of equity) = (value of equity/value of debt and value of equity), wd + we = 1, and t = tax rate on corporate income. The component costs, re and rd, as well as the weights are based on market values: re is frequently calculated as the risk free rate plus a risk premium, based on the capital asset pricing model, and rd reflects the market rates on the firm’s outstanding debt and on the rd of similar firms. The standard treatment includes (1? t) in the WACC calculation to reflect the deductibility of interest payments in the calculation of the corporate tax on the firm’s income statement: the interest cost of debt, by this procedure, is reduced. Also, to avoid double counting the tax â€Å"advantage† of debt, the interest payments are not calculated in the prospective cash flows. This is the textbook treatment in calculating a firm’s cost of capital. (Miller2006) Evaluating a firm’s weighted average cost of capital has its importance to the managers who estimate investments projects for capital budgeting purposes or to the investor whose desire is to assess the overall riskiness and expected return from a company’s activities for valuation purposes. (Miller 2006). Fama and French (1997, 1999) analyse that few difficulties arise because there is some uncertainty in evaluating a firm’s (or banks) cost of capital. This uncertainty is a sort of risk faced by the firm when projecting a project’s cash flow. Bruner, Eades, Harris, and Higgins, (1998) also analyze that there is wide variation in estimating WAAC by different methods. This is due to the manager’s differences in firms cost’s of equity capital that helps in investment decision making. 8 Conceptual Framework DV= DEPENDENT VARIABLE IV= INDEPENDENT VARIABLE MV=MODERATE VARIABLE 9 Conceptual Hypothesis Ho: WACC increases with increase in interest rates and decreases with decrease in interest rates. H1: WACC increases with decrease in tax rates and decreases with increase in interest rates. H3: Cost of debt increases with increases in interest rate and decreases with decrease in interest rates. H4: Cost of debt increases with decrease in tax rates and decreases with increase in interest rates. CHAPTER 3: RESEARCH METHODOLOGY 10 Type of Research Research can be defined as the search for knowledge, or as any systematic investigation, with an open mind and facts, usually using a scientific method. Our research is empirical research, which tests the feasibility of a solution using empirical evidence. This research comprises of both the qualitative and quantitative research method for the data analysis. Firstly we search for the secondary data in order to know and understand the analysis of the previous researcher that how they work and create different perspective for the Weighted Average Cost of Capital than we include the researches of the previous researcher in the literature review of this research in order to create relation and direction between the previous researches with our research. 1 Sampling Technique Sampling Technique used in our research is Random Sampling in which we chosen from a population for investigation. In this method we chose from managers in the Commercial Banks and estimates obtained from the random sample in order to solve our queries related to WACC. 12 Sample Size The Sample Size is comprises of 5 Commercial Banks of Karachi. More than the given sa mple size is not possible because of the time of this semester and also the little difficulty in finding the appointments with the Mangers of Finance Departments. 3 Instruments Questionnaire includes 12 question given to the Managers of the Commercial Banks in order to analyses the perception of the manager that how each individual differs in their perception for the factors that affects the weighted average cost of capital. Most of them include five point likert scales. Other than questionnaire, the balance sheet of 2009 of each bank is used to estimate the WACC for the year and evaluate how the factors like tax rates, interest rates affect WACC. 14 Data Collection This research has been carried out to evaluate the correlation between the factors of cost of capital like tax rates, interest rates and the WACC that how these factors affect the WACC in the commercial banks. The selected five banks include: Allied Bank Limited (ABL), Habib Bank Limite(HBL), Muslim Commercial Bank(MCB), Alfalah Bank and Soneri Bank Limited. Descriptive Data Analysis is taken place in order to estimate WACC. This study employs after-tax cost of debt and equity in order to estimate WACC for selected banks. The procedure of calculating after-tax cost of debt and cost of equity has been stated here. The cost of debt measures the cost of borrowing funds of the firm. In calculating the after-tax cost of debt of each bank for the year 2009 by the following formula: After-tax cost of debt = pre-tax cost of debt (1 – tax rate) The cost of equity evaluated through the given formula: Cost of equity = Gordon growth model =(Do (1 + g))/ (market price per share)] + g) Finally the Weighted Average Cost of Capital calculated by WACC = (Weighted average cost of debt) + (weighted average cost of equity) CHAPTER 4: DATA ANALYSIS 15 QUESTIONNAIRE ANALYSIS Banks normally prefer financing through debt plus equity. 1% of the commercial banks use both (debt and equity) as their sources of finance while remaining 29% of the banks prefer debt for their investment. Only exploitation of equity is not preferred by any banks because through debt finances, the banks gain and improves profit. [pic] Equity sources liable bank to pay dividend, 71% of the banks says that the dividend payment increases the cost of capital while the other 14% said that it decrease the cost of capital and the remaining said that dividend payment has no such impact on the cost of capital. [pic] 5% of the commercial banks said that by using tax shield, cost of capital decreases as it decreases cost of debt and also impact interest rates. While 14% said that it has no such impact like some of Islamic bank like Meezan Bank. [pic] 71% of the sample size agreed that the Cost of capital has positive impact on the capital structure by using both sources of finance while 15% disagree and other 14% are highly disagree. That means most of the commercial banks are in the favor of Ho that the using both sources improves the profit of the commercial bank. [pic] 7% agrees and 28% strongly agrees that the risk factor of the default increases as there is an increases liabilities when bank finance through debt while only 10% of the sample size disagree to this fact but still they have profit by increasing their liabi lities. [pic] Approximately 86% of the commercial banks agree from the fact that the fluctuation in the interest rate affects Cost of Capital and also the Capital Structure of their banks while other says that there is no as such impact of the interest rates but from secondary data we analyze that interest rate is the factor that affects the cost of capital and the capital structure. pic] 71% of the managers agrees that as low dividend payout affects the reputation of their bank, similarly high dividend payout and dividend growth also affect the capital structure decision whereas 29% of the managers said that high dividend has no such impact on the cost of capital and on investment decision. [pic] 100% of the sample size agrees that cost of capital highly impact the investment decision in the commercial bank that also affects capital structure decision making and increases the profit if the weighted average cost of capital is low. [pic] 5% of the sample size agrees that the cost of capital has a huge impact on the level of risk because the maximization of the profit in the commercial bank is truly based on cost of capital and its other factors. [pic] 57% of the sample size agree that the taxes bring variation in the cost of capital in commercial bank while the other denied that taxes has no such affects on cost of capital but many researches has proved that taxes highly affects the cost of capital. [pic] 100% of the managers agree that weighted average cost of capital reduces as there is reduction in the net financial debt. It can be explained by the fact that if the cost of debt remains same but there is variation in the weightage of the debt. The lower weightage reduces the WACC of the commercial bank. [pic] While the method used for the cost of equity varies in different banks. 15% uses the CAPM, 42% uses the Gordon Growth Model whereas the remaining percentage uses both the CPM and Gordon Growth Model method when they finances through the equity. [pic] 16 DESCRIPTIVE ANALYSIS 17 Allied Bank Limited WACC = (Weighted average cost of dbt) + (weighted average cost of equity) WACC = (interest (1-tax)) + (Do (1 + g))/ (market price per share)] + g) COST OF EQUITY: |YEAR |2005 |2006 |2007 |2008 |2009 | |DIVIDEND/SHARE |2. 5 |2. 5 |3 |3. 5 |4 | |GROWTH |0% |0% |20% |16. 66% |(14. 28%) | Average growth=4. 476% Cost of equity = Gordon growth model =(Do (1 + g))/ (market price per share)] + g) Cost of equity =4(1+0. 4476)/59. 11+0. 04476 = 11. 54% | |g |Growth Rate |4. 476% | | |Do |Last Dividend |4 | | |MP |Market Price |59. 11 | | | | | | COST OF DEBT: Interest Rate = 9. 619% Tax rate = 32. 4% Weighted average cost of debt after tax = 0. 09619(1-0. 324) Weighted average cost of debt after tax =6. 503 % WEIGHTED AVERAGE COST OF CAPITAL: | |AMOUNT |%AGE COMPONENT |COST |WACC | | |Thousand |(a) |(b) |(a*b) | | |(000) | | | | |DEBT |39,457,216 |0. 0055 |0. 650 |0. 00036 | |EQUITY |7,110,007,580 |0. 9945 |0. 1154 |0. 11476 | |TOTAL |7,149,464,796 | | |0. 11512 or 11. 51% | ANALYSIS In order to prove our research hypotheses, we find different relation between the interest rates, cost of debt and WACC; we assume different variation in the interest rates as it is the independent variable that affects the WACC hich is the dependent variable. In 2009, the interest rate of ABL was 9. 619%, we assume two different rates in which one is greater than 2009 rate i. e. 15% and other is less than 2009 interest rate i. e. 7. 00%. As the interest rates increases, it also increases the cost of debt that results in the increase in the weighted average cost of capital. Hence, hypotheses Ho and H3 of our research has proved by this analysis because as the interest rate decreases to 7. 00%, the cost of debt also declines which result in decreases in the WACC and vice versa. INTEREST |COD |WACC | |7. 00% |4. 73% |11. 50% | |9. 62% |6. 50% |11. 51% | |15. 00% |10. 14% |11. 52% | pic] For the relation between the taxes rates, cost of debt and WACC. We find different variations among them. Tax rates are the independent variable so they create different affects on WACC as it is dependent variable. In 2009, ABL has the tax rate of 32. 40%. Similarly we assume one tax rate greater than 32. 4% and another is less than 32. 4% in order to prove our hypothesis. From the following analysis, we come to know that as the tax rates increases, it decreases the cost of debt that results in the decrease in the weighted average cost of capital. Hence, hypotheses H1 and H4 of our research have proved by this analysis. |TAX RATES |COD |WACC | |30% |6. 73% |11. 84% | |32. 40% |6. 50% |11. 51% | |35% |6. 25% |11. 50% | [pic] 8 Habib Bank Limited (HBL) WACC = (Weighted average cost of debt) + (weighted average cost of equity) WACC = (interest (1-tax)) + (Do (1 + g))/ (market price per share)] + g) COST OF EQUITY: |YEAR |2005 |2006 |2007 |2008 |2009 | |DIVIDEND/SHARE |1. 5 |1. 48 |1. 48 |3. 01 |0. 30 | |GROWTH |0 |-1. 333% |0 |103. 378% |-90. 033% | Average growth=2. 4024% Cost of equity = Gordon growth model =(Do (1 + g))/ (market price per share)] + g) Cost of equity = 0. 03 (1+0. 024)/40. 9+0. 024 = 2. 475% | |g |Growth Rate |2. 4024% | | |Do |Last Dividend |0. 03 | | |MP |Market Price |40. 90 | | | | | | COST OF DEBT: Interest Rate = (LIBOR+1. 75) = 18. 65% Tax rate = 37. 2% Cost of debt after tax = 18. 65 (1 – 0. 3732) Cost of debt after tax = 11. 69% WEIGHTED AVERAGE COST OF CAPITAL: | |AMOUNT |%AGE COMPONENT |COST |WACC | | |Thousand |(a) |(b) |(a*b) | | |(000) | | | | |DEBT |33,536,837 |0. 786 |0. 169 |0. 0912 | |EQUITY |9,108,000 |0. 214 |0. 0246 |0. 0053 | |TOTAL |42644837 | | |0. 0965 or 9. 65% | ANALYSIS We find different relation between the interest rates, cost of debt and WACC in order to prove our research hypothesis. We assume different variation in the interest rates as it is the independent variable that affects the WACC which is the dependent variable. In 2009, the interest rate of HBL was 18. 65%, we assume two different rates in which one is greater than 2009 rate i. e. 20% and other is less than 2009 interest rate i. e. 12. 00%. As the interest rates increases, it also increases the cost of debt that results in the increase in the weighted average cost of capital, this can easily proved by given table and you can also find this relation through the given graph. Hence, hypotheses Ho and H3 of our research has proved by this analysis because as the interest rate decreases to 12%, the cost of debt also declines to from 11. 69% to 7. 2% and which result in decreases in the WACC from 9. 65% to 6. 44% and vice versa. |INTEREST |COD |WACC | |12% |7. 52% |6. 44% | |18. 65% |11. 69% |9. 65% | |20% |12. 536% |10. 38% | pic] Tax rates are the independent variable so they create different affects on WACC as it is dependent variable. In 2009, HBL has the tax rate of 32. 40% that having COD 6. 503% and a WACC of 11. 51%. Similarly we assume one tax rate greater than 32. 4% and another is less than 32. 4% in order to prove our hypothesis. From the following analysis, we come to know that as the tax rates increases, it decreases the cost of debt that results in the decrease in the weighted average cost of capital. Hence, hypotheses H1 and H4 of our research have proved by this analysis. Tax rates |COD |WACC | |30% |6. 73% |11. 84% | |32. 4% |6. 503% |11. 51% | |35% |6. 25% |11. 50% | [pic] 19 Muslim Commercial Bank (MCB) WACC = (Weighted average cost of debt) + (weighted average cost of equity) WACC = (interest (1-tax)) + (Do (1 + g))/ (market price per share)] + g) COST OF EQUITY: |YEAR |2005 |2006 |2007 |2008 |2009 | |DIVIDEND/SHARE |4. 5 |5. 1 |5. 6 |6 |6. 8 | |GROWTH |0 |13. 33% |9. 8% |7. 14% |13. 33% | Average growth=8. 72% Cost of equity = Gordon growth model = (Do (1 + g))/ (market price per share)] + g) Cost of equity=6. 8(1+0. 0872)/189. 79+0. 0872 =12. 62% | |g |Growth Rate |8. 72% | | |Do |Last Dividend |6. 8 | | |MP |Market Price |189. 79 | | | | | | COST OF DEBT: Interest Rate = 12. 75% Tax rate = 33. 07% Cost of debt after tax = 12. 275 (1 – 0. 3307) Cost of debt after tax = 8. 216% WEIGHTED AVERAGE COST OF CAPITAL: | |AMOUNT |%AGE COMPONENT |COST |WACC | | |Thousand (000) |(a) |(b) |(a*b) | |DEBT |44,662,088 |0. 0221 |0. 0822 |0. 0018 | |EQUITY |1,972,537,950 |0. 778 |0. 1262 |0. 1234 | |TOTAL |2,017,200,038 | | |0. 1252 or 12. 52% | ANALYSIS From many different previous researches, we find different relation between the interest rates, cost of debt and WACC. We assume different variation in the interest rates as it is the independent variable that affects the WACC which is the dependent variable. In 2009, the interest rate of MCB was 12. 28%, we assume two different rates in which one is greater than 2009 rate i. . 11. 6% and other is less than 2009 interest rate i. e. 14. 90% in order to find the after affects of these changes. Remaining other things constant, as the interest rates increases, it also increases the cost of debt that results in the increase in the weighted average cost of capital, this can easily proved by given table and you can also find this relation through the given graph. Hence, hypotheses Ho and H3 of our research has proved by this analysis because as the interest rate decreases to 11. 6%, the cost of debt also declines to from 8. 22% to 7. 6% and which result in decreases in the WACC from 12. 52% to 12. 51% and vice versa. |INTERSET RATES |COD |WACC | |11. 60% |7. 76% |12. 51% | |12. 28% |8. 22% |12. 52% | |14. 90% |9. 97% |12. 6% | [pic] For the relation between the tax rates, cost of debt and WACC. We find different variations among them. Tax rates are the independent variable so they create different affects on WACC as it is dependent variable. In 2009, MCB has the tax rate of 33. 07%. Similarly we assume one tax rate greater than 33. 07% and another is less than 33. 07% in order to prove our hypothesis. From the following analysis, we come to know that as the tax rates increases, it decreases the cost of debt that results in the decrease in the weighted average cost of capital. Hence, hypotheses H1 and H4 of our research have proved by this analysis. |TAX RATES |COD |WACC | |30% |8. 59% |12. 53% | |33. 07% |8. 22% |12. 52% | |40% |7. 36% |12. 50% | pic] 20 Al-falah Bank Limited WACC = (Weighted average cost of debt) + (weighted average cost of equity) WACC = (interest (1-tax)) + (Do (1 + g))/ (market price per share)] + g) COST OF EQUITY: |YEAR |2005 |2006 |2007 |2008 |2009 | |DIVIDEND/SHARE |0. 5 |1. 25 |1 |2. 25 |2. 25 | |GROWTH |0 |150% |-20% |125% |0 | Average growth=51% Cost of equity = Gordon growth model =(Do (1 + g))/ (market price per share)] + g) Cost of equity = 2. 25(1+0. 51)/26. 13+0. 51 = 64% | |g |Growth Rate |51% | | |Do |Last Dividend |2. 25 | | |MP |Market Price |26. 13 | | | | | | COST OF DEBT: Weighted average Interest Rate = 6. 406%. Tax rate = 34. 84% Cost of debt after tax = 0. 06406 (1 – 0. 3484) Cost of debt after tax = 4. 174% WEIGHTED AVERAGE COST OF CAPITAL: | |AMOUNT |%AGE COMPONENT |COST |WACC | | |Thousand (000) |(a) |(b) |(a*b) | |DEBT |18,687,600 |0. 00138 |0. 0417 |0. 000057 | |EQUITY |13,491,562,500 |0. 986 |0. 64 |0. 639104 | |TOTAL |13,510,250,100 | | |0. 639 or 63. 9% | ANALYSIS Many different researches have concluded that different variation in the interest rates as it is the independent variable that affects the WACC which is the dependent variable. In 2009, the interest rate of Alfalah Bank was 6. 404%, we assume two different rates in which one is greater than 2009 rate i. e. 8. 6% and other is less than 2009 interest rate i. . 4. 6% in order to find the after affects of these changes. Remaining other things constant, as the interest rates increases, it also increases the cost of debt that results in the increase in the weighted average cost of capital, this can easily proved by given table and you can also find this relation through the given graph. Hence, hypotheses Ho and H3 of our research has proved by this analysis because as the interest rate decreases to 4. 6%, the cost of debt also declines to from 4. 174% to 2. 997% and which result in decreases in the WACC from 63. 914% to 63. 0% and vice versa. |INTEREST RATES |COD |WACC | |4. 6% |2. 997% |63. 90% | |6. 406%. |4. 174% |63. 914% | |8. 6% |5. 604% |63. 918% | [pic] For the relation between the taxes rates, cost of debt and WACC. We find different variations among them. Tax rates are the independent variable so they create different affects on WACC as it is dependent variable. In 2009, Alfalah has the tax rate of 34. 84%. Similarly we assume one tax rate greater than 34. 84% and another is less than 34. 84% in order to prove our hypothesis. From the following analysis, we come to know that as the tax rates increases, it decreases the cost of debt that results in the decrease in the weighted average cost of capital. Hence, hypotheses H1 and H4 of our research have proved by this analysis as they are negatively correlated. TAX RATES |COD |WACC | |25% |4. 805% |63. 917% | |34. 84%. |4. 174% |63. 9% | |40% |3. 844% |63. 915% | [pic] 21 Soneri Bank Limited ANALYSIS Soneri Banks has following interest rates and tax rates, which affect WACC in the same manner as it affects other commercial Banks. In 2009, it has interest rate of 12. 63% that has the cost of debt 8. 54% and the WACC is of 0. 37%. Variation in the interest rates brings following changes and hence proves our research. |INTEREST RATES |COD |WACC | |11. 60% |7. 84% |0. 35% | |12. 3% |8. 54% |0. 37% | |14. 60% |9. 87% |0. 43% | [pic] Tax rates posses the same affect. As tax rates increases, it has negative relation with the COD and WACC that proves the hypothesis H1 and H4 of our research as in 2009, the tax rate was 32. 34%, when it decrease, the COD increases which also increases WACC and again inversely proportional when Tax rate increase. TAX RATES |COD |WACC | |25% |9. 47% |0. 41% | |32. 34% |8. 54% |0. 37% | |40% |7. 57% |0. 33% | [pic] CHAPTER 5: CONCLUSION AND RECOMMENDATION 1. Conclusion According to past related researches, there should be a suitable balance between debt and equity as it has effects on the risk and return of the shareholders of the bank. If there are reasonable proportions of debt and equity in the capital structure, it maximizes the shareholders wealth while minimizing the cost of capital and that could be considered as the optimal capital structure. Factors like Interest payment expected deductibility give prospect for value. If the tax deductibility is realized by the bank then stockholders get the expected benefit of the tax deduction. If firm finances through debt, then it has financial risk. And if through equity, then it has business risk. The cost of capital can affect capital structure that the taxes bring variation in the cost of capital and hence affect the capital structure of the banks. Cost of equity increases if the financial risk become high. The cost of equity and debt increases with the increase in debt. On after tax cost of debt, there is the greater the impact of interest deductibility, if the tax rate s higher. Weighted average cost of capital become low with the cost of capital high, if the debt capital increase in proportion. Cost of equity increases with the cost of debt. If the cost of components high the weighted average cost of capital increases and reason is that shareholder prefer to use of debt when expected value of tax benefit is attractive as compared to the added financial risk associated with the debt. The Demanded rate of increase in cost of debt and equity, effects on value of the expected increase in tax benefit of using more debt. Interest rate affects the cost of debt. It involves the risk components that have the probability of default on the debt. In this research, the main finding of the paper suggests that the commercial bank should focus on reducing the cost of capital that maximizes the profit. According to our findings, it is concluded that each banks has its policies of financing. Each bank takes decision of selecting capital structure for minimizing their cost, risk factor differently that occupies good financial position in market. Factors that have impact on cost of capital as well as on capital structure are tax rates, interest rates, dividends payout, risk of default and other like market fluctuation, corporate governance. These factors differently affect the cost of capital and capital structure of each commercial bank. Some banks agree that tax brings variation in the capital structure as the use of taxes decreases the cost of debt but some banks strongly disagree, like Islamic bank Meezan and Alfalah,. These Islamic banks have no such interest rate risk. Tax impacts on cost of capital increases cost of capital agrees by majority of commercial banks, and disagrees by some commercial banks. Dividend impacts on cost of capital increases cost of capital agrees by some banks, and disagrees by some banks. Interest rate brings effects on increase in cost of capital as the interest rate increases the cost of debt also increases but some banks strongly disagreed. Other factors like market fluctuation also influence interest rate to increase. And sometimes sudden increase in interest rates influence market. Due to this, all factors differently impact on cost of capital variation (increase and decrease) and capital structure decision making. We have estimated Weighted Average Cost of Capital (WACC) of commercial banks in order to find the effects of cost of capital and their factors on profit and capital structure decision making. We analyze from computing WACC with different assumptions that; †¢ The interest rates increases (decreases), it also increases (decreases) the cost of debt that results in the increase (decreases) in the weighted average cost of capital. Hence, hypotheses Ho and H3 is verify. †¢ The tax rates increases (decreases), it decreases (increases) the cost of debt that results in the decrease (increases) in the weighted average cost of capital. Hence, hypotheses H1 and H4 is verify. The cost of capital improves the profit and capital structure decision making in which other factors also takes part to maximize the profit in the commercial banks. . Recommendations Cost of capital plays a central role in valuation, portfolio selection, and capital budgeting. Therefore, measuring and validating the cost of capital has been the subject of much research. †¢ For reducing cost of capital of bank, we recommend that proportion of debt plus equity financing is better although debt increa ses risk of default as most of the commercial banks prefer debt financing. Because, debt financing provides tax benefit under suitable market conditions and reduces WACC. †¢ Through equity financing banks give dividend which increases their reputation in market. In short, payment of dividend gives market position. And it is also important because in terms of financial ratios, equity financing shows bank more strong as compared to debt or liabilities. †¢ Adopt an optimal capital structure to improve shareholder value. Capital structure is part of a bank’s package of financial policies, which include dividend policy and amount of debt and equity claims issued which improves share holder wealth and reduces WACC. Conventional thinking in the area of finance has also assumed that a certain amount of debt in the capital structure is a good thing. Interest rates are high in Pakistan. The following reforms looked-for from the Government of Pakistan (GOP): †¢ Allow and encourage consideration of financial institutions to reduce disintegration in the financial sector. †¢ Strengthen legal and judicial reform laws to allow financial institutions to foreclose on guarantee to reduce risk in the case of unpaid loans without going through lengthy court proceedings. CHAPTER 7: AREA OF FURTHER STUDIES After performing this research we have concluded that the researches on the Weighted Average Cost of Capital in Banks are less or there is no proper research that has taken place for the Commercial Banks. There should be more researches on the factor that are affecting WACC in the commercial banks as its proper estimation maximizes profit. It is found with the help of weightage there is a huge impact on the cost of capital that may be a source of further studies for the commercial bank because proper weightage of debt and equity can improves or enhances the profit of commercial banks. The WACC affects the profit or Capital Structure decision making that has direct affect on the reputation of the commercial banks. CHAPTER 8: REFERENCES †¢ Nadeem A. Sheikh and Zongjun Wang, June 2010, International Journal of Innovation, Management and Technology, Vol. 1, No. 2, Financing Behavior of Textile Firms in Pakistan, pg 130-135 †¢ Khadka, H Bahadur,2006. Leverage and the Cost of Capital. The Journal of Nepalese Business Studies,Vol. III, No1: 85-91 †¢ Modigliani, F. and Miller, M. H. 1963. Corporate Income Taxes and the Cost of Capital: A Correction. American Economic Review: 433-443. †¢ Shubber, K. and Alzafiri, E. (2008). â€Å"Cost of capital of Islamic banking institutions: an empirical study of a special case†, International Journal of Islamic and Middle Eastern Finance and Management, Vol. No. 1, pp. 10-19 †¢ Bruner, R. F. , Eades, K. M. , Harris, R. S. , Higgins, R. C. (1998). â€Å"Best practices in estimating the cost of capital: survey and synthesis†, Financial Practice and Education, Spring/Summer, pp. 13-28. †¢ Miller, R. A. (2006). â€Å"The weighted average cost of capital is not qu ite right†, The Quarterly Review of Economics and Finance, 49 (2009) 128–138 †¢ Jorgenson, Dale W. and Ralph Landau (1993). Tax Reform and the Cost of Capital – An International Comparison. Washington, D. C. : Brookings Institution. †¢ Fama, E. F. , and K. French, 1997, Industry costs of equity, Journal of Financial Economics 43, 153-193. †¢ Fama, E. F. , and K. French, 1999, The corporate cost of capital and the return on corporate investment, Journal of Finance 54, 1939-1967. †¢ John J. Pringle, the Capital Decision in Commercial Banks, the Journal of Finance, Vol. 29, No. 3 (Jun. , 1974), pp. 779-795 †¢ Richard Lambert*, Christian Leuz, Robert E. Verrecchia â€Å"Accounting Information, Disclosure, and the Cost of Capital† September 2005, Revised, August 2006 †¢ Barton, S. L. and P. J. Gordon (1987). ‘Corporate strategy: Useful perspective for the study of capital structure? Academy of Management Review, 12, pp. 67-75 †¢ Balakrishnan, S. and I. Fox (1993). ‘Asset specificity, firm heterogeneity, and capital structure’, Strategic Management Journal, 14(1), pp. 3-16. †¢ A. Seth (1990). ‘The impact of LBOs on strategic direction’, California Management Review, 32(1), pp. 30-43. †¢ Groth John C. , â€Å"Capital structure: Perspectives. † Management Decision 35:7 (1997): 552–561. †¢ John C. Groth, Professor, Texas A University, USA â€Å"Capital Structure: Implications†, 1997. †¢ Ross, Stephen A. , Randolph W. Westerfield, and Jeffrey Jaffe. Corporate Finance. 9th ed. Boston, MA: McGraw-Hill, 2010. †¢ Alan J. Auerbach, Wealth Maximization and the Cost of Capital, the Quarterly Journal of Economics, Vol. 93, No. 3 (Aug. , 1979), pp. 433 †¢ John R. Graham, â€Å"Taxes and Corporate Finance: A Review†, the Review of Financial Studies, Vol. 16, No. 4 (Winter, 2003), pp. 1075-1129 †¢ Meziane Lasfer, Professor, Cass Business School, UK â€Å"Optimizing the Capital Structure: Finding the Right Balance between Debt and Equity†. †¢ William F. Coffin and Sean Collin, 2006, Techniques to lower the cost of capital in today’s volatile markets, CCG Investor Relations. Ali Murtaza, manager financial reporting and analysis, finance division, BANK ALFALAH LIMITED. †¢ Amir Ahmed, risk manager, Asst. vice president, Risk Management Unit, MEEZAN BANK. †¢ Aniel Victor, Asst. manager, Riak management, UBL FUNDS MANAGERS. †¢ Syed Ali Shabar, Branch Manager, MCB BANK LIMITED. †¢ Raza Abbas, Asst. vice president , Portfolio Management, HABIB BANK LIMITED. †¢ Aamir Maysorewala, customer service manager, ALLIED BANK LIMITED. †¢ Riazullah Khan, Assistant Vice President Manager, SONERI BANK. APPENDIX A Questionnaire NAME_________________________ DESIGNATION_________________ BANK__________________________ BRANCH_______________________ 1. Debt and equity are the sources of finance, through which source your bank finances their investment? a) Debt b) Equity c) Both 2. What is the impact of dividend payment on cost of capital as using equity is source of finance that will liable bank to pay dividend? a) Increase cost of capital b) Decrease cost of capital c) No impact on cost of capital 3. Tax shield also has an important factor in cost of capital, how tax impact on cost of capital? a) Increase cost of capital b) Decrease cost of capital ) No impact on cost of capital 4. Cost of capital has positive impact by using both sources of finance. [pic] 5. When bank finance through debt, it increase liabilities that also increase the risk factor of default. [pic] 6. Fluctuation in the interest rate affects Cost of Capital and also the Capital Structure of your banks. [pic] 7. As low dividend payout will affect the reputation of your ban k, is high dividend payout and dividend growth affect the capital structure decision? [pic] 8. Cost of capital occupies an important role in the financial management and in investment decision making in commercial banks. [pic] . Cost of capital affects the level of risk in commercial bank. [pic] 10. Taxes bring variation in the capital structure of commercial banks. [pic] 11. Reducti How to cite Revisiting Cost of Capital in Commercial Banks, Papers

Where Are You Going free essay sample

In Joyce Carol Oates’ â€Å"‘Where Are You Going, Where Have You Been? ’ and Smooth Talk: Short Story into Film,† Oates writes that Connie â€Å"An innocent young girl is seduced by way of her own vanity† and that â€Å"she confuses death for erotic romance† (419). Oates clearly defines her point when Connie first discovers Arnold Friend at the drive in diner. She catches Friend staring at her with a big smile and Connie â€Å"slit her eyes at him and turned away, but she couldn’t help looking back† (409). The fact that Connie â€Å"slits† her eyes and â€Å"couldn’t help looking back† (409) shows that she is interested, but does not want to put her true feelings on display. Her more erotic interest comes in the form of his style and physical appearance. Oates illustrates this by using diction and imagery; â€Å"she liked the way he dressed† and Connie noticing â€Å"the small hard muscles of his arms and shoulders† (419) when Friend First appears at her house. We will write a custom essay sample on Where Are You Going or any similar topic specifically for you Do Not WasteYour Time HIRE WRITER Only 13.90 / page Unlike Connie, the reader sees Arnold Friend in all of his depravity, we see him as the predator. He displays this at the drive in by â€Å" waving his finger and laughing† and saying â€Å"Gonna get you baby† (409). Oates again uses carefully thought out word choice to prognosticate that we could see Friend later in the story to possibly confront Connie in a derogatory way. In this way, we can see that Connie is both seduced by way of her own vanity† and that â€Å"she confuses death for erotic romance† (419). Oates demonstrates how Connie’s life can be seen in two different lights or two sides, â€Å"everything about her had two sides to it, one for home and one for anywhere that was not home† (408). Her life at home was unusual, Connie’s mother is jealous of her beauty and always scalding her about everything. Though Connie’s mother once encompassed external beauty, her looks had dissipated over time.. Her mother finds anyway possible to negatively comment about her, always using her older sister June as an example of how she should live her life. June becomes Connie’s mothers assault weapon because she is not a threat, as described by Oates, June is â€Å"twenty four and still lives at home† and â€Å"so plain and chunky† (407). This fed Connie’s confidence because she â€Å"thought her mother preferred her to June because she was prettier† (409). Connie led a pessimistic life with an attitude, she had no one there whom she felt the need to impress. When she was anywhere else besides her house, everything was different, her clothes, her walk, and even her laugh. â€Å" she wore a pullover that looked one way at home and another way when she was away from home† (408). It was all about impressing, showing off, and being someone she wanted to be, but wasn’t. When Connie was out the house, most likely at the mall or drive in diner, her life turned into a movie, where all reality was turned into a dream. This is evident when she â€Å"goes down an alley a mile or so away† (409) with a boy named Eddie and later remembers the experience as â€Å"sweet and gentle, the way it was promised in movies and songs† (410). Arnold Friend sees right through Connie, for who she really is, a pretty, young, and insecure girl. Connie gets all the attention that she craves, but the moment Friend takes off his glasses, she notices that he is much older than was previously thought. Panic starts to set in when Friend and Ellie won’t leave her house. Friend knows about all her family and friends and where they all are. He starts to come on stronger with every word as he states â€Å"I’m your lover. You don’t know it now, but you will† and later â€Å"I’m always nice at first, the first time. †(414). This is implying that everything is alright now or â€Å"the first time† (414) but is suggesting something bad will happen later. At this moment Connie looses all of her cockiness and vanity and gets a reality check, she is no longer living in a dream, her stress becomes real. She notices everything around her as if she’s never seen it before, as illustrated by Oates â€Å"The kitchen looked like a place she had never seen before, some room she had run inside but which wasn’t good enough† (415). Friend never looses his composure, he is calm, almost sadistic, he promises her he will not enter the house as long as she doesn’t pick up the phone. Finally, Friend threatens Connie’s family, but nothing will happen, so long as Connie goes with him. Connie realizes when Friend says â€Å"The place you came from ain’t there anymore, and where you in mind to go is canceled out. (417) she will not be coming back. All of her pervious vanities are stripped as she makes a generous sacrifice to save the lives of her family. Oates describes distillation; â€Å"Connie is shallow, vain, silly, and hopeful-but capable nonetheless of an unexpected gesture of heroism† (419). Connie surprises us all with her heroism, she ends he r life deep and pure, not shallow and vane as once conceived. Even after her whole world comes crashing down with all of Connie’s insecurities showing, she makes a choice that was thought implausible.

Emotional Personas for Successful Content Marketing

Emotional Personas for Successful Content Marketing Incorporating personas for entrepreneurial content marketing is not a new concept. More and more companies are using personas to create customized content for their target audience and are significantly improving communication outcomes with their (potential) customers. Many companies focus on the creation of personas based on socio-demographic characteristics (such as age, gender, income). For content marketing in particular, this approach isnt very effective. Read below to find out why as well as learn what other approaches are more beneficial Incorporating personas for entrepreneurial content marketing is not a new concept. More and more companies are using personas to create customized content for their target audience and are significantly improving communication outcomes with their (potential) customers. Many companies focus on the creation of personas based on socio-demographic characteristics (such as age, gender, income). For content marketing in particular, this approach isn t very effective. Read below to find out why as well as learn what other approaches are more beneficial.What are personas?The concept of personas is quite simple to explain: Basically, the term describes a fictitious person who is ideally representative of your particular target audience (or a sector of your target audience). The profile of this fictitious person includes information such as demographic characteristics, habits, living and working conditions as well as attitudes. The more detailed and realistic you can make your portrayal of this buyer persona, the better your marketing strategies, campaigns and content can be aligned to this fictional but idealized profile.Why are socio-demographic personas alone of limited value for your content marketing?More and more companies now recognize the potential benefits of content marketing in their communications with customers, prospects and stakeholders. However, this development means that if you want this content marketing to succe ed, you need to create very high-quality content and also ensure that your content strikes a chord with your target audience.Personas are a very good way to identify the characteristics and interests of your target group and to ensure that your content creation does not get bogged down. It also helps maintain focus, so you can be sure you only create content that is relevant to your target audience. However, if you are governed solely by the socio-demographic characteristics of your target audience, this approach can actually have the exact opposite effect. The following example has been mentioned frequently but illustrates the point very well: Imagine you have developed the following persona for your content marketing:Age: Over 60Origin: EnglandMarital Status: Married/ChildrenIncome: I Million/YearInterests: Dogs and The AlpsThis is the persona for which you now want to create content unfortunately, the description fits both Prince Charles and Ozzy Osbourne. Do you think that Prin ce Charles and Ozzy Osbourne will really be won over with the same topics and content?So if we restrict ourselves to the creation of personas based on socio-demographic data alone, there is a risk that the persona will combine demographic twins with completely different behaviors and interests. The resulting content will probably not be relevant, and valuable potential will be wasted.Furthermore, decisions made in the B2B sector are not always entirely rational, and emotions and feelings will (often unconsciously) affect most decisions. So its important to focus on behaviors and psychological factors in order to develop personas with an emotional dimension.How can you create emotional personas for your content marketing?Emotional personas are closely linked to the concept of emotional targeting (a sub-region of neuromarketing). Emotional targeting aims to reach the target group directly at an emotional level. With the help of a trigger – for example, certain words, colors or images – (potential) customers can be subconsciously attracted to a product rather than inspired by rational arguments. This approach has long been used successfully in TV advertising; however, in online marketing – and specifically in content marketing – theres plenty of untapped potential.One proven method of creating emotional personas is based on the concept of the Limbic Map  ®. This theory was developed and extensively tested by the Nymphenburg Group, and its success has been proven many times. When creating personas based on the Limbic Map, people are divided into personality types with very specific characteristics, emotions, goals, needs and behaviors. The basis of the Limbic Map is the tension that exists between three primary emotional elements: stimulance, balance and dominance. Most adjacent interim areas (adventure/ thrill, discipline/ control and fantasy/ pleasure) can also be used to reflect more detailed character traits. Thus, a total of seve n basic emotions or Limbic Types can be identified:AdventurerPerformerDisciplinarianTraditionalistPeacemakerOpen-mindedPleasure-seekerNot every person will necessarily belong 100% to one of these types, but each classification has its own unique tendencies. This makes it possible to employ communications targeted at the corresponding brain area and to ensure that a specific type of person feels emotionally influenced by the product or content. The Limbic Map (Copyright Source: Nymphenburg Group)In order to develop emotional personas according to this model, it is advisable to talk with sales, customer support or others with direct customer contact. Personas based on real customer experiences, and additional assumptions where appropriate, are then mapped onto the Limbic Map. As a result of this process, different personas will emerge.During the next step, overlapping personas can be combined into an individual persona to keep the final number of personas limited. Then, in the final step, you can select the personas that seem to promise the most success for your business.With any content you create from now on, make sure it matches one of your defined personas as closely as possible. This applies to both the theme and the content as well as to the content format, distribution channel, choice of words, images and colors used and, where appropriate, the call-to-action (CTA).Of course, its not essential to apply the principle of Limbic Map. Other approaches, such as the Sinus-Milieus model (developed by the Sinus Institute), can also be used. Regardless of the model followed, its important that your persona creation focus on the emotions, desires and needs of your target group(s) rather than be based on socio-demographic factors alone.

Free Essays on Adolescence

Adolescence is a long period in a person’s life when they are making the transition from childhood to adulthood. This socially constructed period of growth is a time that entails a lot of transformations, including physical, cognitive, and psychosocial changes. This time period lasts almost a decade and I have to agree that this stage in a developing child’s life is a very stressful period of unquestionable adjustment and change. Physical and biological changes that occur during adolescence are a rapid growth in height and weight, changes in body proportions and form, and attainment of sexual maturity. Hormonal changes during this time are associated with heightened moodiness and emotionality, aggression, and depression. A cognitive change that occurs with the adolescence period is a change in the thought process. The speed of information processing continues to increase and thinking may remain somewhat immature, but they are now capable of abstract reasoning and sophisticated moral judgments At a psychosocial level adolescents are often in search for their own identity. This process of finding one’s self is a vital process that builds on achievements of earlier stages in development and lays the foundation for coping with the crises of adult life. Relationships with family and peers, sexuality, and values all influence a person’s achievement of identity. Self image, attitudes, and personalities are all factors in determining one’s identity. After reviewing each developmental part of adolescence, it is obvious that there is a lot of change happening at this stage of maturity. This period causes stress for adolescents because of the new experiences and feelings they are being exposed to. Besides all of the unexpected biological changes, the social and cognitive changes that are occurring cause uneasiness and anxiety among them. Are they children or are they adults? This question is not clearly answered by... Free Essays on Adolescence Free Essays on Adolescence Adolescence is a time of â€Å"storm and strife†. Adolescence is a period of time between childhood and adulthood. This is the age when one can either make something of his life or destroy it all, this is the time when a person makes those friends who changes the how he looks at life and how he faces it. An adolescent's main goal these days is to fit in and not be different from their peers. In this paper I will explore the probabilities of the following grievances experienced by the adolescent youth which are drugs, suicide, and homelessness. : : Body of the Essay : : Adolescence is the developmental stage between childhood and adulthood; it generally refers to a period ranging from teen years through 20s. As now life is growing more complex, however, adolescents are increasingly cut off from the activities of their elders, leaving most young people with education as their sole occupation. Inexorably, this has isolated many of them from the adult world and has prolonged their adolescence. Now almost all over the world the adolescent years have become marked by violence to an alarming degree. The phenomenon of teenage suicide has become particularly disturbing, but risk-taking behaviors of many sorts can be observed, including alcohol and drug abuse. Adolescents only want to have fun and go to parties. They get addicted to drugs and start to revolve their lives around drugs. Some get arrested and others encounter death. Addiction is so powerful that it takes control of people's brains and only tells them to do wrong. Drugs are highly Addictive, and most of the adolescents main goal is to fit in the group by doing what the whole group does, this is how they get into crack, booze, pot and crystal. Dr. Nowinski's book in which he states his study of Adolescents drugs and addicts describes specific cases of adolescent drug abuse that he has worked with. He describes the different patterns of adolescent drug abuse and the causes of such ty... Free Essays on Adolescence Adolescence is a long period in a person’s life when they are making the transition from childhood to adulthood. This socially constructed period of growth is a time that entails a lot of transformations, including physical, cognitive, and psychosocial changes. This time period lasts almost a decade and I have to agree that this stage in a developing child’s life is a very stressful period of unquestionable adjustment and change. Physical and biological changes that occur during adolescence are a rapid growth in height and weight, changes in body proportions and form, and attainment of sexual maturity. Hormonal changes during this time are associated with heightened moodiness and emotionality, aggression, and depression. A cognitive change that occurs with the adolescence period is a change in the thought process. The speed of information processing continues to increase and thinking may remain somewhat immature, but they are now capable of abstract reasoning and sophisticated moral judgments At a psychosocial level adolescents are often in search for their own identity. This process of finding one’s self is a vital process that builds on achievements of earlier stages in development and lays the foundation for coping with the crises of adult life. Relationships with family and peers, sexuality, and values all influence a person’s achievement of identity. Self image, attitudes, and personalities are all factors in determining one’s identity. After reviewing each developmental part of adolescence, it is obvious that there is a lot of change happening at this stage of maturity. This period causes stress for adolescents because of the new experiences and feelings they are being exposed to. Besides all of the unexpected biological changes, the social and cognitive changes that are occurring cause uneasiness and anxiety among them. Are they children or are they adults? This question is not clearly answered by...

Ethnic Diversity Essay Example | Topics and Well Written Essays - 250 words

Ethnic Diversity - Essay Example The growth minority health care professionals, however, is slowed down by a number of barriers including racism, discrimination, and lack of commitment to changing situation. Racism and prejudice is the root cause and the most evident reality of a certain barrier to increasing the number of minority health care professionals, particularly among non-White females. Patient and co-workers still associate the nursing image to those of White, middle-aged woman. According to the study of Douglas et al., standards integrating social justice will facilitate culturally-competent care among nurses and address racial and ethnic inequalities. This is because the social justice principle is grounded on the belief of fair and equal rights regardless of differences in ethnicity and demographics. Nursing schools must equip students with cultural competence and must still in mind about social justice. The image of a nurse as a White, middle-aged woman must be gradually changed to ethnically-diverse, competent nurse to cope with the increasing need of the healthy population. In a span of time, the United States’ population will soon have a diverse set of the population; thus, we need diverse, culturally-competent nurse to holistically address the needs of this population. Meanwhile, all of this vision of ethnically-diverse, competent nurse will not become a reality if policies for ensuring implementation will not be integrated into legislation – both in the preparatory schools for nursing and in the workforce settings.

Problem and solution Essay Example | Topics and Well Written Essays - 500 words

Problem and solution - Essay Example Another effect of junk foods is poor performance and obesity. These foods contain very huge amounts of fats. Obesity is caused by accumulation of these fats in the body resulting in abnormal weight gains. A person who consumes junk foods at least twice a week gains an extra 4.5kg of body weight. Johnson, Paul Kenny(2010). Solution: the most effective way of reducing obesity is regular physical exercises. Exercising leads to burning of excess calories since it speeds up metabolism rate in the body hence aiding in shedding away some of the weight. Excessive intake of junk food should also be avoided, instead one should increase intake of white meat such as fish instead of red meat. High levels of sodium and fats contained in junk food can lead to high blood pressure or hypertension. Disproportionate dietary sodium can also have an undesirable effect on renal function and can cause kidney ailment. Consumption of junk food during pregnancy can intensify the risk of poor mental health, anxiety and depression in the young ones. It also causes emotional and behavioral problems such as tantrums and aggression. When junk foods are frequently used, they can cause cancer. This is based on the fact that they lack all the vitamins and proteins that are essential for proper functioning of the body. The immune system is also impaired. As a result, the diseased cells can become cancerous. Furthermore, packed junk foods usually contain preservatives and coloring which have carcinogenic substance. These carcinogenic substances are harmful for the body especially for the cardiovascular

Lack of a clear plan, ineffective leadership, marketing effectiveness, Term Paper

Lack of a clear plan, ineffective leadership, marketing effectiveness, and lack of execution are common problems of a small business and how strategic planning can help avoid them - Term Paper Example Independent ownership implies sole proprietorship, partnership, corporation, or any other legal form (U.S. Small Business Administration, 2010). Irrespective of the industry, a small business operates in; it has been found that they suffer from largely the same types of problems. Small size of a business enterprise ensures that the management acts as a sharp cost controllers and active member of routine operations. This gives rise to many leadership related problems and loss of far-sighted visions. The discussion below further details the types of problems faced by small businesses. A major problem that infests a small business is ineffective leadership. Leadership, to be effective, should be influential enough for the employees so as to motivate them to work ethically and create values for their customers (Grenny, 2009). Most of the leaders today have no concrete idea of their work. They get involved in the hassles of routine instead of focussing on the long term goal of the business. The problem appears to more widespread in small businesses because the compulsion to save costs are higher. Hence, to cut down upon the number of employees, leaders end-up becoming a part of the operations instead of managing the operations. Also, leaders of such small businesses are often not trained scientifically and their decisions are the outcome of their experiences rather than established managerial practices. Another common problem among small businesses is lack of a clear plan (Harsberger, 2010). Lack of a plan results in short sightedness of the business and distracts the manager in aligning all the activities towards the common goal of the organization. Ultimately, non-essential activities result in wastage of cash resources which otherwise could be applied more usefully. There appears to be a direct correlation between the clarity of plan and the success of the business (Perry, 2001) Even if a business has proper marketing strategy and plan, the execution

Huckleberry Finn: Themes of Religion

Huckleberry Finn: Themes of Religion Phyu Han Theme of Religion in Huckleberry Finn Relating to today’s Society In The Adventures of Huckleberry Finn, Mark Twain makes a satire of some characters’ absolute faith in religion compared to other characters’ doubt that such beliefs are for real. Miss Watson and Widow Douglas both believe that heaven â€Å"good place† exists and they explain to Huckleberry Finn that the only way to get there is to pray and go to church every Sunday. â€Å"She told me to pray every day, and whatever I asked for I would get it. But it warn’t so. I tried it.† (Twain 8) On the contrary, Huckleberry Finn presumes that religion and faith are unrealistic because people cannot see them. â€Å"I went and told the widow about it, and she said the thing a body could get by praying for it was ‘spiritual gifts’.† (Twain 8) In relation to the issues concerning faith in religion in The Adventures of Huckleberry Finn by Mark Twain, there are still conflicts between faith in God, the Creator, and belief in scientific ideas in to day’s society. Currently in today’s world population, the religious â€Å"unaffiliated† category makes up the third largest group (Heneghan). This category consists of atheists, agnostics, and people with no evident religion (Heneghan). In present society, religion faces a new challenge known as scientific research. Many people still disagrees on whether the Creator has created and expanded the universe or if it was caused the initial Big Bang explosion (O’Neil). Scientists have continued to search for a definite answer. On March 17, 2014, scientists announced a Big Bang breakthrough that might suggest that the Big Bang did not occur as a simple explosion caused by hot and dense matter but was a highly ordered event (O’Neil). Scientists in South Pole working with a telescope called BICEP 2 detected gravitational waves that provides evidence for the universe’s rapid expansion known today as the Big Bang theory (O’Neil). The evidence found was that the univer se expanded faster than the speed of light when it was a trillionth of a trillionth of a trillionth of a second old (O’Neil). Christian scientists claim that the evidence ensures that there was a beginning (O’Neil). In terms of cause and effect, if there was a beginning, there must have been a beginner according to the Christian scientists (O’Neil). This struggle between religion and science relates to Huck’s disbelief in religion due to him not being able to see it. Huck Finn is especially realistic as he would not believe in religion for it could only give him ‘spiritual gifts’. Presently, people continue to be unsure of how the universe began and expanded to life. As a result, 16.3% of the world’s population currently is religious unaffiliated (Heneghan). In addition to the Big Bang discovery, recent findings show proofs to the authenticity of the Bible. Advanced Physics students of Leicester University tested out if Biblical dimensions of Noah’s ark in Genesis could hold 70,000 animals (â€Å"Students Surprised to Find Noah’s Ark Feasible†). In Genesis, there would have been 35,000 animals needed to be saved by Noah times two concerning males and females of the animals (â€Å"Students Surprised to Find Noah’s Ark Feasible†). The students constructed the ark based on estimated Biblical dimensions and found that the ark could have held 70,000 animals plus food and water (â€Å"Students Surprised to Find Noah’s Ark Feasible†). The result shows some truthfulness in the Biblical stories which provides confirmation to some aspects of the Bible. Widow Douglas believed in Biblical stories such as about Moses and the Bulrushers and she found importance in teaching Huck about them â€Å"After s upper she got out her book and learned me about Moses and the Bulrushers† (Twain 2). Religious stories are a part of the religion. If the stories are real, the religion itself could potentially be real. As well as Biblical stories, there are also proofs to Biblical descriptions of Earth’s structure. According to Genesis 7:11, when the Flood began, ancient transition zone water rose up through the crust and all the fountains of the great deep were broken up (â€Å"Water Deep in Earth’s Mantle†). A new discovery reveals that mineral of earth’s mantle material can store great amounts of water (â€Å"Water Deep in Earth’s Mantle†). This means that the subterranean Flood could have originated from ancient reservoirs in the upper earth mantle (â€Å"Water Deep in Earth’s Mantle†). Moreover, Scriptures suggests that Earth was created by God with water (â€Å"Water Deep in Earth’s Mantle†). The research reveals that the mantle could hold two oceans’ volumes of water (â€Å"Water Deep in Earth’s Mantle†). The idea opposing creationism, the idea that the universe and life originates from a grand design, is evolution. Evolution disproves the belief that all living things and the universe are created by God, the Creator. Scientists sequenced the genome of the vesper bats to identify the cause of their vast diversity (Going batty for jumping DNA as a cause of species diversity.). The researchers found jumping elements in their genome called DNA transposons (Going batty for jumping DNA as a cause of species diversity.). The results prove that changes and mutations in DNA cause evolution in living organisms (Going batty for jumping DNA as a cause of species diversity.). It also proves that different species of living organisms were not created by the Creator but organisms evolved into diversified species. In support of Darwin’s evolution theory, modern researches indicates that there are 338 known species of hummingbirds and they are still evolving based on habitats (Hummingbirds 22- million-year-old history of remarkable change is far from complete.). The conflict continues as Creationists in Texas education board refuses approval of a commonly used biology textbook due to the belief that the textbook portrays evolution as a fact and not as a theory (Rich). Several reviewers for the textbook refused to accept evolution and climate change as scientific fact (Rich). In today’s society, there are still disagreements on whether schools should incorporate creationism into their teachings. In regards of the state’s creationism law called the Louisiana Science Education Act, Governor of Louisiana Bobby Jindal allows the teachings of creationism in Louisiana public schools (Kopplin). Some people believe that this is wrong and that schools should not blur the lines of science facts and religious beliefs in their education (Kopplin). â€Å"If I catch you about that school I’ll tan you good. First you know you’ll get religion, too. I never see such a son.† (Twain 15) In The Adventures of Huckleberry Finn, P ap sensed that Huck will learn religion as along with education because schools in those times incorporated religion with education. Throughout history, there has been continuous conflict between religion and realism. People have always searched for truth and answers to the mysteries of creation and being. In today’s society, human beings call belief in religion, faith, because it is simply trust in its existence without actually knowing its existence as a fact. There have always been believers such as Miss Watson and Widow Douglas and doubters such as Huck Finn and Pap. The real question, though, is do human beings really need to know religion as a fact when it could make people behave better? In The Adventures of Huckleberry Finn, Huckleberry Finn does not believe in the existence of religion but he was taught by religious people such as Widow Douglas that stealing is wrong. As a result, he developed a conscience and realizes he is stealing. For this reason, he calls stealing â€Å"borrowing† and only steals what he necessarily needs.