An Integrated Model for the Cost-Minimizing Funding of Corporate Activities Over Time

Manak C. Gupta

Chapter 49 in Handbook of Financial Econometrics, Mathematics, Statistics, and Machine Learning:(In 4 Volumes), 2020, pp 1821-1844 from World Scientific Publishing Co. Pte. Ltd.

Abstract: To enhance the value of a firm, the firm’s management must attempt to minimize the total discounted cost of financing over a planning horizon. Unfortunately, the variety of sources of funds and the constraints that may be imposed on accessing funds from any one source make this exercise a difficult task. The model presented and illustrated here accomplishes this task considering issuing new equity and new bonds, refunding the bonds, borrowing short term from financial institutions, temporarily parking surplus funds in short-term securities, repurchasing its stock, and retaining part or all of a firm’s earnings. The proportions of these sources of funds are determined subject to their associated costs and various constraints such as not exceeding a specific debt/equity ratio and following a stable dividend policy, among others.

Keywords: Financial Econometrics; Financial Mathematics; Financial Statistics; Financial Technology; Machine Learning; Covariance Regression; Cluster Effect; Option Bound; Dynamic Capital Budgeting; Big Data (search for similar items in EconPapers)
JEL-codes: C01 C1 G32 (search for similar items in EconPapers)
Date: 2020
References: Add references at CitEc
Citations:

Downloads: (external link)
https://www.worldscientific.com/doi/pdf/10.1142/9789811202391_0049 (application/pdf)
https://www.worldscientific.com/doi/abs/10.1142/9789811202391_0049 (text/html)
Ebook Access is available upon purchase.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:wsi:wschap:9789811202391_0049

Ordering information: This item can be ordered from

Access Statistics for this chapter

More chapters in World Scientific Book Chapters from World Scientific Publishing Co. Pte. Ltd.
Bibliographic data for series maintained by Tai Tone Lim ().