Role of debt-to-equity ratio in project investment valuation, assessing risk and return in capital markets

Abstract In this paper, a case study was performed with an aim to analyze the asset returns for two different companies and risk from capital projects using standard pricing method. To demonstrate how present values of future cash flows are influenced by discount rates when debt-to-equity structure ratio is varied between 0 2.5 debt-to-equity. The breakeven sensitivity also conducted in relation gross margin ratios company. It found that high value yielded flatter net increase margins. Capital appraisal techniques were applied illustrate project annual its relationship change cost capital. Analysis showed average increased beyond threshold value, firm’s investments reduced significantly. A covariance analysis determine individual stocks traded BSE Sensex S&P 500 indices beta values. Comparing total revealed not only increasing values–but earnings potential, growth rate firm, dividend payout trading stock price. deviation on portfolio has been computed varying weight ratios. positive correlation equity balanced portfolio, while negative risk.