TIME-DEPENDENT MODEL OF CORPORATE INVESTMENTS IN FIXED ASSETS

摘要

The article examines the simplest model of investment in fixed assets by a corporation using debt. The value of corporation's equity is the evaluation criterion. The value of equity can be determined by direct capitalization of gross profit in the income approach, which enables us to investigate the value of the corporation as a function of debt. This dependence called the financial management line may be studied from various angles. It has been previously shown that the financial management line is an increasing concave and piecewise-linear function and the formula for its generalized differential has been derived. The financial management line is constructed by using a steady-state model of income beyond the planning horizon. In the present article, we supplement the previous model with a general time-dependent model of income inside the planning horizon. We accordingly propose tools for estimating the dependence of the actual current value of equity on the potential value of the company beyond the planning horizon.