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An Optimal Investment Policy in Equity-Debt Financed Firms with Finite Maturities
| Content Provider | Semantic Scholar |
|---|---|
| Author | Yagi, Kyoko Takashima, Ryuta Sawaki, Katsushige |
| Copyright Year | 2010 |
| Abstract | In this paper we examine an optimal investment policy of the firm, which is financed by issuing equity and debt during a period of time, using real options framework. We examine the effects of the maturity of investment on the values of equity, debt, firm, tax shield and bankruptcy cost. Specifically, we show that the investment timing depends not only on the investment thresh- old but also on the coupon payment. We also show that the optimal leverage ratio is determined independently of investment decision. |
| File Format | PDF HTM / HTML |
| Alternate Webpage(s) | http://www.aporc.org/LNOR/12/ISORA2010F35.pdf |
| Language | English |
| Access Restriction | Open |
| Content Type | Text |
| Resource Type | Article |
