Record Details

Influence Of Debt Financing On The Effectiveness Of The Investment Project Within The Modigliani–Miller Theory

Research Journal of Economics, Business and ICT

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Field Value
 
Title Influence Of Debt Financing On The Effectiveness Of The Investment Project Within The Modigliani–Miller Theory
 
Creator Brusov, Peter; Finance University
Filatova, Tatiana; Finance University
Orehova, Natali; Finance University
Brusov, Pavel ; Finance University
Brusova, Nastia ; Finance University 
 
Subject —
Effectiveness Of The Investment Project, Debt Financing, Modigliani–Miller Theory
G31, E22, G00, C02
 
Description We study the problem of the influence of debt financing on the effectiveness of the investment project within the theory of Modigliani–Miller and obtain quantitative results for the first time. The effectiveness of the investment project is considered from two perspectives: the owners of equity and debt and equity holders only. It was shown, that NPV practically always decreases with leverage in case of a constant value of equity, and the maximum leverage level, at which the project is still effective (NPV>0), was found. In case of a constant value of the total invested capital it is possible an increase of NPV with leverage as well as its decrease, depending on the relation between the parameters of the project.
 
Publisher English Time Schools & Overseas Education
 
Contributor —
 
Date 2011-06-07
 
Type info:eu-repo/semantics/article
info:eu-repo/semantics/publishedVersion
Peer-reviewed Article
 
Format application/pdf
 
Identifier http://ojs.journals.cz/index.php/RJEBI/article/view/191
 
Source Research Journal of Economics, Business and ICT; Vol 2 (2011)
2047-7848
2045-3345
 
Language eng
 
Relation http://ojs.journals.cz/index.php/RJEBI/article/view/191/195
 
Rights Copyright (c) 2011 Peter Brusov, Tatiana Filatova, Natali Orehova, Pavel  Brusov, Nastia  Brusova
https://creativecommons.org/licenses/by/3.0/