The Effect of the Mix of Equity and Debt on the Selection of Projects
作者:
Alan Bohl,
FredericH. Murphy,
期刊:
The Engineering Economist
(Taylor Available online 1991)
卷期:
Volume 37,
issue 1
页码: 61-75
ISSN:0013-791X
年代: 1991
DOI:10.1080/00137919108903057
出版商: Taylor & Francis Group
数据来源: Taylor
摘要:
We extend the capital budgeting model to include the effect of debt, where the cost of debt increases with the increasing percentage of debt in the capital base. This inherently nonlinear problem is converted to linear program. We show that the firm should act as a monopsonist in acquiring debt and select projects using their net present value. The results presented are consistent with and extend financial theory.
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