Optimal Capital Structure for Finite Cash Flows

Ignacio Velez-Pareja (), Felipe Mejia-Pelaez and James W. Kolari

No 8229, Proyecciones Financieras y Valoración from Master Consultores

Abstract: This paper shows how to proceed to find the optimal capital structure and value with period-to-period constant and variable leverage, when the discount rate for tax shields is Ke, the cost of levered equity. Numerical procedures and recursive closed-form non-circular expressions for the finite-period and perpetuity cases are presented, which facilitate any kind of implementation including Montecarlo simulations.

Keywords: Optimal capital structure; valuation; non-circularity; finite cash flows; perpetuities tax shield; cost of equity (search for similar items in EconPapers)
JEL-codes: G12 G31 J33 M21 M40 M41 (search for similar items in EconPapers)
Pages: 40
Date: 2011-03-30
References: Add references at CitEc
Citations:

Downloads: (external link)
http://ssrn.com/abstract=1799605

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:col:000463:008229

Access Statistics for this paper

More papers in Proyecciones Financieras y Valoración from Master Consultores
Bibliographic data for series maintained by Ignacio Velez ().