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| Author: | Prezas, P. |
| Title: | Effects of debt on optimal asset duration and investment |
| Journal: | Managerial Finance
1994 : VOL. 20:7, p. 59-78 |
| Index terms: | INVESTMENT DEBT ASSETS |
| Language: | eng |
| Abstract: | The purpose of this paper is twofold. First, it relaxes the all-equity financing assumption by allowing for a mix of debt-equity financing and studies the effect of debt structure (a financial decision) and optimal asset duration (a real decision). Given debt-equity financing, the effects of changes in the corporate tax rate, deprecation, and thus, the Tax Reform Act of 1986, on optimal asset lfe, are examined. Second, this paper endogenizes investment in the asset and shows that it should be determined simultaneously with holding period. |
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