Financial Analytics: Science and Experience

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Financial Analytics: Science and Experience

23(65) - 2011 June

Influence of capital structure on the effectiveness of investment project from the perspective of the owners of equity and debt

Vol. 4, Iss. 23, JUNE 2011

Available online: 21 June 2011

Subject Heading: INVESTMENT POLITICS

JEL Classification:

Brusov P.N. doctor of physics and mathematics science, the professor the department of applied mathematics, Financial University under the Government of Russian Federation
pnb1983@yahoo.com

Filatova T.V. candidate of economical science, the professor the department of the financial management, Financial University under the Government of Russian Federation
mfilatova@fa.ru

In the work the effectiveness of investment project is examined from the point of view of the owners of its own and borrowed capital. It is shown that the parameter of effectiveness NPV practically always diminishes leverage in the case of the constancy of the value of its own capital S. For each of two cases (with S = const) is found the maximum value of leverage, with which the project remains effective (NPV > 0).

Keywords: investments, financing, Modigliani–Miller theory, projects

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ISSN 2311-8768 (Online)
ISSN 2073-4484 (Print)

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