Whether It Is Possible to Increase the Investment Efficiency, Increasing Tax on Profit Rate? An Abnormal Influence of Growth of Tax on Profit Rate on the Efficiency of the Investment

Peter Brusov, Tatiana Filatova and Natali Orekhova
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Tatiana Filatova: Financial University under the Government of Russian Federation
Natali Orekhova: Financial University under the Government of Russian Federation

Chapter Chapter 21 in The Brusov–Filatova–Orekhova Theory of Capital Structure, 2023, pp 419-472 from Springer

Abstract: Abstract Within modern theory of capital cost and capital structure by Brusov–Filatova–Orekhova (BFO theory) (Brusov et al., Appl Financ Econ 21(11):815–824, 2011a, Res J Econ Bus ICT 2:16–21, 2011b, Res J Econ Bus ICT (UK) 2:11–15, 2011c, Finance Credit 435:2–8, 2011d, Appl Financ Econ 22 (13):1043–1052, 2012a, J Rev Glob Econ 1:106–111, 2012b, J Rev Glob Econ 2:94–116, 2013a, J Rev Glob Econ 2:183–193, 2013b, Cogent Econ Finance 2:1–13, 2014a, J Rev Glob Econ 3:175–185, 2014b; Filatova et al., Bull FU 48:68–77, 2008) and created within this theory modern investment models influence of growth of tax on profit rate on the efficiency of the investment is investigated. It has been shown that for long-term investment projects, as well as for arbitrary duration projects the growth of tax on profit rate change the nature of the NPV dependence on leverage at some value t*: there is a transition from diminishing function NPV(L) when t

Keywords: Investment projects; Taxing; Efficiency of investments; Brusov–Filatova–Orekhova (BFO) theory; Modigliani–Miller theory; Debt financing (search for similar items in EconPapers)
Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:spr:sprchp:978-3-031-27929-4_21

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DOI: 10.1007/978-3-031-27929-4_21

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