Financial Analytics: Science and Experience

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Financial Analytics: Science and Experience

26(116) - 2012 July

Abnormal dependence of cost of equity capital of the company on leverage

Vol. 5, Iss. 26, JULY 2012

Available online: 9 July 2012

Subject Heading: MATHEMATICAL METHODS OF ANALYSIS IN ECONOMY

JEL Classification:

Brusov P.N. Doctor of Physical and Mathematical Sciences, Professor of department "Applied Mathematics", the Financial University under the Government of the Russian Federation
pnb1983@yahoo.com

Filatova T.V. PhD in Economics, Professor of department "Financial management", the Financial University under the Government of the Russian Federation
mfilatova@fa.ru

Dolgov D.M. Student of department "Financial management", the Financial University under the Government of the Russian Federation
infoddisney@gmail.com

Orekhova N.P. PhD of Physical and Mathematical Sciences, Senior Research Fellow, the Southern Federal University
Natali_Orehova@Bk.Ru

Brusov P.P. PhD of Physical and Mathematical Sciences, Senior Research Fellow, the Southern Federal University
ppb@bmail.ru

Brusova A.P. Head of department "Financial Settlements and Risks", JSC "MTS"
flowerik1@yandex.ru

Qualitatively new effect in corporate finance is found: reduction of cost of own capital with leverage growth. In the article complete research of effect within Brusov-Filatova-Orekhova theory is carried out. At some ratios between cost of loan and share capital the open effect takes place at the rates of a profit tax existing in the western countries and Russia that provides its practical value.

Keywords: tax, cost, structure, capital, leverage, Modigliani-Miller's theory, Brusov-Filatova-Orekhova theory

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

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