The Brusov–Filatova–Orekhova Theory of Capital Structure: Applications in Corporate Finance, Investments, Taxation and Ratings

Preface
Contents
About the Authors
Chapter 1: Introduction
	1.1 Introduction
	References
Part I: Corporate Finance
	Chapter 2: Capital Structure Theory: Past, Present, Future
		2.1 Introduction
		2.2 Basic Theories of Capital Structure
			2.2.1 A Historical Point of View
			2.2.2 The Empirical (Traditional) Approach
			2.2.3 The Modigliani-Miller Theory
				2.2.3.1 The Modigliani-Miller Theory with Taxes
				2.2.3.2 The Modigliani-Miller Theory with Taxes
			2.2.4 Modifications of Modigliani-Miller Theory
				2.2.4.1 Hamada Model
				2.2.4.2 The Cost of Capital Under Risky Debt
				2.2.4.3 The Account of Corporate and Individual Taxes (Miller Model)
				2.2.4.4 Alternative Expression for WACC
				2.2.4.5 The Miles-Ezzell Model Versus the Modigliani-Miller Theory
		2.3 Trade-Off Theory
			2.3.1 Static Theory
			2.3.2 Dynamic Theory
			2.3.3 Proof of the Bankruptcy of the Trade-Off Theory
		2.4 Accounting for Transaction Costs
		2.5 Accounting for Asymmetries of Information
		2.6 Signaling Theory
		2.7 Pecking Order Theory
		2.8 Behavioral Theories
			2.8.1 Manager Investment Autonomy
			2.8.2 The Equity Market Timing Theory
			2.8.3 Information Cascades
		2.9 Theories of Conflict of Interests
			2.9.1 Theory of Agency Costs
			2.9.2 Theory of Corporate Control and Costs Monitoring
			2.9.3 Theory of Stakeholders
		2.10 BFO Theory
			2.10.1 Brusov-Filatova-Orekhova Theorem
		2.11 BFO Theory and Modigliani-Miller Theory Under Inflation
		2.12 BFO Theory for the Companies Ceased to Exist at the Time Moment n (BFO-2 Theory)
		2.13 The Modigliani-Miller Theory with Advance Payments of Tax on Profit
		2.14 The Modigliani-Miller Theory with Arbitrary Frequency of Payment of Tax on Profit
		2.15 Generalization of the Modigliani-Miller Theory for the Case of Variable Profit
		2.16 The Generalization of the Brusov-Filatova-Orekhova Theory for the Case of Payments of Tax on Profit with Arbitrary Freque...
		2.17 Benefits of Advance Payments of Tax on Profit: Consideration Within the Brusov-Filatova-Orekhova (BFO) Theory
		2.18 Influence of Method and Frequency of Profit Tax Payments on Company Financial Indicators
		2.19 The Brusov-Filatova-Orekhova (BFO) Theory with Variable Income
		2.20 Qualitatively New Effects in the Theory of Capital Structure
			2.20.1 Golden and Silver Ages of the Company
			2.20.2 Silver Age of the Company
			2.20.3 Anomalous Dependence of the Company´s Equity Value on Leverage
		2.21 A Stochastic Extension of the Modigliani-Miller Theory
		2.22 Conclusions
		References
	Chapter 3: Main Theories of Capital Structure
		3.1 The Traditional Approach
		3.2 Modigliani-Miller Theory
			3.2.1 Modigliani-Miller Theory Without Taxes
			3.2.2 Modigliani-Miller Theory with Taxes
			3.2.3 Main Assumptions of Modigliani-Miller Theory
			3.2.4 Modifications of Modigliani-Miller Theory
		References
	Chapter 4: Modern Theory of Capital Cost and Capital Structure: Brusov-Filatova-Orekhova Theory (BFO Theory)
		4.1 Companies with Arbitrary Lifetime. Brusov-Filatova-Orekhova Equation
		4.2 Comparison of Modigliani-Miller Results (Perpetuity Company) with Myers Results (1-Year Company) and Brusov-Filatova-Orekh...
		4.3 Brusov-Filatova-Orekhova Theorem
		4.4 From Modigliani-Miller to General Theory of Capital Cost and Capital Structure
		4.5 Conclusions
		References
	Chapter 5: Bankruptcy of the Famous Trade-Off Theory
		5.1 Optimal Capital Structure of the Company
		5.2 Absence of the Optimal Capital Structure in Modified Modigliani-Miller Theory (MMM Theory)
		5.3 Analysis of the Trade-Off Theory Within the Brusov-Filatova-Orekhova Theory
		5.4 The Causes of Absence of the Optimum Capital Structure in Trade-Off Theory
		5.5 Conclusion
		References
	Chapter 6: New Mechanism of Formation of the Company Optimal Capital Structure, Different from Suggested by Trade-off Theory
		6.1 Absence of Suggested Mechanism of Formation of the Company Optimal Capital Structure Within Modified Modigliani-Miller The...
		6.2 Formation of the Company Optimal Capital Structure Within Brusov-Filatova-Orekhova (BFO Theory)
			6.2.1 Decrease of Debt Cost at Exponential Rate
		6.3 Simple Model of Proposed Mechanism
		6.4 Conclusion
		References
	Chapter 7: The Global Causes of the Global Financial Crisis
		References
	Chapter 8: The Role of Taxing and Leverage in Evaluation of Capital Cost and Capitalization of the Company
		8.1 The Role of Taxes in Modigliani-Miller Theory
		8.2 The Role of Taxes in Brusov-Filatova-Orekhova Theory
			8.2.1 Weighted Average Cost of Capital of the Company WACC
			8.2.2 Equity Cost ke of the Company
			8.2.3 Dependence of WACC and ke on Lifetime of Company
		8.3 Conclusions
		References
	Chapter 9: A Qualitatively New Effect in Corporate Finance: Abnormal Dependence of Equity Cost of Company on Leverage
		9.1 Introduction
		9.2 Equity Cost in the Modigliani-Miller Theory
		9.3 Cost of Equity Capital Within Brusov-Filatova-Orekhova Theory (BFO Theory)
			9.3.1 Dependence of Cost of Equity ke on Tax on Profit Rate T at Different Fix Leverage Level L
			9.3.2 Dependence of Cost of Equity ke on Leverage Level L (the Share of Debt Capital wd) at Different Fix Tax on Profit Rate T
		9.4 Dependence of the Critical Value of Tax on Profit Rate T on Parameters n, k0, kd of the Company
		9.5 Practical Value of Effect
		9.6 Equity Cost of 1-Year Company
		9.7 Conclusions
		References
	Chapter 10: Inflation in Brusov-Filatova-Orekhova Theory and in Its Perpetuity Limit: Modigliani-Miller Theory
		10.1 Introduction
		10.2 Accounting of Inflation in Modigliani-Miller Theory Without Taxes
		10.3 Accounting of Inflation in Modigliani-Miller Theory with Corporate Taxes
		10.4 Accounting of Inflation in Brusov-Filatova-Orekhova Theory with Corporate Taxes
			10.4.1 Generalized Brusov-Filatova-Orekhova Theorem
		10.5 Generalized Brusov-Filatova-Orekhova Formula Under Existing of Inflation
		10.6 Irregular Inflation
		10.7 Conclusions
		10.8 Inflation Rate for a Few Periods
		References
	Chapter 11: Benefits of Advance Payments of Tax on Profit: Consideration Within Brusov-Filatova-Orekhova (BFO) Theory
		11.1 Introduction
		11.2 Modification of the Brusov-Filatova-Orekhova (BFO) Theory for Companies with Frequent Payments of Tax on Income
			11.2.1 Calculation of the Tax Shield
			11.2.2 Company Value
			11.2.3 The Weighted Average Cost of Capital, WACC
				11.2.3.1 Calculation of the Equity Cost
		11.3 Results
			11.3.1 Dependence of the Weighted Average Cost of Capital, WACC, Capital Value, V, Equity Cost, ke, on Leverage Level L for 3-...
			11.3.2 Dependence of the Weighted Average Cost of Capital, WACC, Capital Value, V, Equity Cost, ke, on Leverage Level L for 6-...
		11.4 Comparison of Results for 3-Year and 6-Year Companies
		11.5 Discussion
		11.6 Summary and Conclusions
		References
	Chapter 12: The Generalization of the Brusov-Filatova-Orekhova Theory for the Case of Payments of Tax on Profit with Arbitrary...
		12.1 Introduction
			12.1.1 Capital Structure of the Company
			12.1.2 The Modigliani-Miller Theory
		12.2 Some Modifications of Modigliani-Miller Theory
			12.2.1 Hamada Model: Accounting Market Risk
			12.2.2 The Account of Corporate and Individual Taxes (Miller Model)
			12.2.3 More General Case for WACC Formula
			12.2.4 Fiscal Pressure, Financial Liquidity, Financial Solvency, and Financial Leverage
			12.2.5 Brusov-Filatova-Orekhova (BFO) Theory
			12.2.6 Trade-off Theory
		12.3 Modification of the Brusov-Filatova-Orekhova (BFO) Theory for Companies with Frequent Payments of Tax on Income
			12.3.1 Calculation of the Tax Shield
			12.3.2 Derivation of the Modified BFO Formula for Weighted Average Cost of Capital (WACC)
			12.3.3 Formulas for Capital Value, V, and Equity Cost, ke
		12.4 Results
			12.4.1 Dependence of the Weighted Average Cost of Capital, WACC, Capital Value, V, Equity Cost, ke, on Leverage Level L at Dif...
				12.4.1.1 Dependence of The Weighted Average Cost of Capital, WACC, on Leverage Level L at Different Frequency of Payment of Ta...
				12.4.1.2 Dependence of the Company Value, on Leverage Level L at Different Frequencies of Payment of Tax on Profit p for 3-yea...
				12.4.1.3 Dependence of the Equity Cost, ke, on Leverage Level L at Different Frequency of Payment of Tax on Profit p for 3-yea...
			12.4.2 Dependence of the Weighted Average Cost of Capital, WACC, Capital Value, V, Equity Cost, ke, on Leverage Level L at Dif...
				12.4.2.1 Dependence of The Weighted Average Cost of Capital, WACC, on Leverage Level L at Different Frequency of Payment of Ta...
				12.4.2.2 Dependence of the Company Value, V, on Leverage Level L at Different Frequency of Payment of Tax on Profit p for 6-ye...
				12.4.2.3 Dependence of the Equity Cost, ke, on Leverage Level L at Different Frequencies of Payment of Tax on Profit p for 6-y...
		12.5 The Discussion and Conclusions
		References
	Chapter 13: Influence of Method and Frequency of Profit Tax Payments on Company Financial Indicators
		13.1 Introduction
			13.1.1 A Literature Review on the Development of the Capital Cost and Capital Structure Theory
		13.2 The Modified Brusov-Filatova-Orekhova (BFO) Theory for the Case of Frequent Advance Profit Tax Payments
			13.2.1 The Tax Shield Calculation
			13.2.2 Derivation of the Modified BFO Formula for the Weighted Average Cost of Capital (WACC)
			13.2.3 Formulae for the Capital Value and Equity Cost
		13.3 Results and Discussions
			13.3.1 The Impact of the Frequency of Profit Tax Payments on the Dependence of the Weighted Average Cost of Capital, Capital V...
			13.3.2 The Impact of the Frequency of Profit Tax Payments on the Dependence of the Weighted Average Cost of Capital, Capital V...
		13.4 Conclusions
		References
	Chapter 14: Generalization of the Brusov-Filatova-Orekhova Theory for the Case of Variable Income
		14.1 Introduction
			14.1.1 Literature Review
			14.1.2 Before the Modigliani and Miller Work
			14.1.3 Modigliani-Miller Theory
				14.1.3.1 Modigliani-Miller Theory Without Taxes
				14.1.3.2 Modigliani-Miller Theory with Taxes
			14.1.4 Unification of Capital Asset Pricing Model (CAPM) with Modigliani-Miller Model
				14.1.4.1 Miller Model
			14.1.5 Brusov-Filatova-Orekhova (BFO) Theory
			14.1.6 Alternate WACC Formula
			14.1.7 Trade-off Theory
			14.1.8 Materials and Methods
		14.2 Modification of the BFO Theory for the Case of Companies with Variable Incomes
			14.2.1 The Levered Company Value, V
			14.2.2 The Unlevered Company Value, V0
			14.2.3 The Tax Shield Value
		14.3 Results and Discussions
			14.3.1 Calculations for Two-Year Company
				14.3.1.1 Calculations of Weighted Average Cost of Capital, WACC
				14.3.1.2 Calculations of the Discount Rate, WACC-g
				14.3.1.3 Calculations of the Company Value, V
				14.3.1.4 Calculations of the Equity Cost, ke
			14.3.2 Calculations for Four-Year Company
				14.3.2.1 Calculations of Weighted Average Cost of Capital, WACC
				14.3.2.2 Calculations of the Discount Rate, WACC-g
				14.3.2.3 Calculations of the Company Value, V
				14.3.2.4 Calculations of the Cost of Equity ke
			14.3.3 Comparison with the Theory of Modigliani and Miller with Variable Income
		14.4 Conclusions
		References
	Chapter 15: BFO Theory with Variable Profit in Case of Advance Payments of Tax on Profit
		15.1 Introduction
			15.1.1 Review of Literature
			15.1.2 The Basis of the Traditional Approach (TA)
			15.1.3 Modigliani-Miller Theory
				15.1.3.1 Modigliani-Miller Theory Without Taxes
				15.1.3.2 Modigliani-Miller Theory with Taxes
			15.1.4 Unification of Capital Asset Pricing Model (CAPM) with Modigliani-Miller Model
			15.1.5 Miller Model
			15.1.6 Brusov-Filatova-Orekhova (BFO) Theory
			15.1.7 Alternative Expression for WACC
			15.1.8 Trade-off Theory
		15.2 Modification of the Brusov-Filatova-Orekhova (BFO) Theory to the Case of Companies with Variable Incomes and Advance Paym...
			15.2.1 The Financially Dependent Company Value, V
			15.2.2 The Value of a Financially Independent Company, V0
			15.2.3 The Tax Shield Value
		15.3 Results and Discussions
			15.3.1 Five-year Company
				15.3.1.1 Weighted Average Cost of Capital, WACC
				15.3.1.2 Calculations of the Discount Rate, WACC-g
				15.3.1.3 Calculations of the Company Value, V
				15.3.1.4 Calculations of the Equity Cost, ke
			15.3.2 Study the Dependence of Financial Indicators on kd
				15.3.2.1 The Weighted Average Cost of Capital, WACC
				15.3.2.2 The Discount Rate, WACC-g
				15.3.2.3 The Company Value, V
			15.3.3 Impact of Company Age, n, on Main Financial Indicators of the Company
				15.3.3.1 WACC(L)
				15.3.3.2 Discount Rate WACC-g
				15.3.3.3 Company Value, V
				15.3.3.4 Equity Cost, ke
				15.3.3.5 Results Summary
		15.4 Conclusions
		References
	Chapter 16: BFO Theory with Variable Profit: Two Types of Payments of Tax on Profit: Advanced Payments and at the Ends of Peri...
		16.1 Introduction
			16.1.1 A Literature Review
				16.1.1.1 Methods and Materials
		16.2 The Brusov-Filatova-Orekhova (BFO) Theory Modification to the Case of Companies with Variable Incomes and Advance Payment...
			16.2.1 The Value of a Financially Dependent Company, V
			16.2.2 The Value of a Financially Independent Company, V0
			16.2.3 The Tax Shield Value, TS
		16.3 Results and Discussions
			16.3.1 Calculations of the Equity Cost, ke
			16.3.2 Study the Dependence of Financial Indicators on kd
				16.3.2.1 The Weighted Average Cost of Capital, WACC
				16.3.2.2 The Discount Rate, WACC-g
				16.3.2.3 The Company Value, V
			16.3.3 Impact of Company Age, n, on Main Financial Indicators of the Company
				16.3.3.1 WACC(L)
				16.3.3.2 Discount Rate WACC-g
				16.3.3.3 Company Value, V
				16.3.3.4 Equity Cost, ke
				16.3.3.5 Results Summary
		16.4 Conclusions
		References
Part II: Investments
	Chapter 17: Investment Models with Debt Repayment at the End of the Project and their Application
		17.1 Investment Models
		17.2 The Effectiveness of the Investment Project from the Perspective of the Equity Holders Only
			17.2.1 With the Division of Credit and Investment Flows
		17.3 Without Flows Separation
		17.4 Modigliani-Miller Limit (Perpetuity Projects)
			17.4.1 With Flows Separation
			17.4.2 Without Flows Separation
		17.5 The Effectiveness of the Investment Project from the perspective of the Owners of Equity and Debt
			17.5.1 With Flows Separation
			17.5.2 Without Flows Separation
		17.6 Modigliani-Miller Limit
			17.6.1 With Flows Separation
			17.6.2 Without Flows Separation
		References
	Chapter 18: Investment Models with Uniform Debt Repayment and their Application
		18.1 Investment Models with Uniform Debt Repayment
		18.2 The Effectiveness of the Investment Project from the Perspective of the Equity Holders Only
			18.2.1 With the Division of Credit and Investment Flows
			18.2.2 Without Flows Separation
		18.3 The Effectiveness of the Investment Project from the Perspective of the Owners of Equity and Debt
			18.3.1 With Flows Separation
				18.3.1.1 Projects of Arbitrary (Finite) Duration
			18.3.2 Without Flows Separation
		18.4 Example of the Application of the Derived Formulas
		18.5 Conclusions
		References
	Chapter 19: The Analysis of the Exploration of Efficiency of Investment Projects of Arbitrary Duration (within Brusov-Filatova...
		19.1 The Effectiveness of the Investment Project from the Perspective of the Equity Holders Only
			19.1.1 With the Division of Credit and Investment Flows
			19.1.2 Without Flows Separation
		19.2 The Effectiveness of the Investment Project from the Perspective of the Owners of Equity and Debt
			19.2.1 With the Division of Credit and Investment Flows
			19.2.2 Without Flows Separation
		19.3 The Elaboration of Recommendations on the Capital Structure of Investment of Enterprises, Companies, Taking into Account ...
			19.3.1 General Conclusions and Recommendations on the Definition of Capital Structure of Investment of Enterprises
		References
	Chapter 20: Whether it Is Possible to Increase Taxing and Conserve a Good Investment Climate in the Country?
		20.1 Influence of Tax on Profit Rates on the Efficiency of the Investment Projects
		20.2 Investment Models
		20.3 Borrowings Abroad
		20.4 Dependence of NPV on Tax on Profit Rates at Different Leverage Levels
		20.5 At a Constant Value of Equity Capital (S = Const)
		20.6 Without Flows Separation
			20.6.1 At a Constant Value of the Total Invested Capital (I = Const) (Fig. 20.13)
			20.6.2 At a Constant Value of Equity Capital (S = Const)
		20.7 Conclusions
		References
	Chapter 21: Whether It Is Possible to Increase the Investment Efficiency, Increasing Tax on Profit Rate? An Abnormal Influence...
		21.1 Dependence of NPV on Leverage Level L at Fixed Levels of Tax on Profit Rates t
			21.1.1 The Effectiveness of the Investment Project from the Perspective of the Equity Holders Only
			21.1.2 The Effectiveness of the Investment Project from the Perspective of the Equity and Debt Holders
		21.2 Dependence of NPV on Tax on Profit Rates at Fixed Leverage Levels L
			21.2.1 The Effectiveness of the Investment Project from the Perspective of the Equity Holders Only
			21.2.2 The Effectiveness of the Investment Project from the Perspective of the Equity and Debt Holders
		References
	Chapter 22: Optimizing the Investment Structure of the Telecommunication Sector Company
		22.1 Introduction
		22.2 Investment Analysis and Recommendations for Telecommunication Company ``Nastcom Plus´´
			22.2.1 The Dependence of NPV on Investment Capital Structure
			22.2.2 The Dependence of NPV on the Equity Capital Value and Coefficient β
		22.3 Effects of Taxation on the Optimal Capital Structure of Companies in the Telecommunication Sector
		22.4 Conclusions
		References
	Chapter 23: Innovative Investment Models with Frequent Payments of Tax on Income and of Interest on Debt
		23.1 Introduction
			23.1.1 The Literature Review
			23.1.2 Some Problems Under the Evaluation of the Effectiveness of the Investment Projects
			23.1.3 The Discount Rates
			23.1.4 The Structure of the Paper
		23.2 The Effectiveness of the Investment Project from the Perspective of the Equity Holders Only
			23.2.1 With Flow Separation
			23.2.2 Without Flow Separation
		23.3 The Effectiveness of the Investment Project from the Perspective of the Owners of Equity and Debt
			23.3.1 With Flow Separation
			23.3.2 Without Flow Separation
		23.4 Discount Rates
		23.5 Results and Discussions
			23.5.1 Numerical Calculation of the Discount Rates
				23.5.1.1 The Long-Term Investment Projects
				23.5.1.2 The Arbitrary Duration Investment Projects
			23.5.2 The Effectiveness of the Long-Term Investment Project from the Perspective of the Owners of Equity Capital
			23.5.3 The Effectiveness of the Long-Term Investment Project from the Perspective of the Owners of Equity and Debt
			23.5.4 The Effectiveness of the Arbitrary Duration Investment Projects from the Perspective of the Owners of Equity Capital
			23.5.5 The Effectiveness of the Arbitrary Duration Investment Project from the Perspective of the Owners of Equity and Debt
			23.5.6 Discussions
		23.6 Conclusions
		References
	Chapter 24: The Role of the Central Bank and Commercial Banks in Creating and Maintaining a Favorable Investment Climate in th...
		24.1 Introduction
		24.2 Investment Models with Debt Repayment at the End of the Project
			24.2.1 The Effectiveness of the Investment Project from the Perspective of the Equity Holders Only (Without Flows Separation)
				24.2.1.1 Modigliani-Miller Limit (Long-Term (Perpetuity) Projects
		24.3 Modigliani-Miller Limit (Long-Term (Perpetuity) Projects)
			24.3.1 The Dependence of the Efficiency of Investments NPV on the Level of Debt Financing L for the Values of Equity Costs k0 ...
			24.3.2 The Dependence of the Efficiency of Investments NPV on the Level of Debt Financing L for the Value of Equity Costs k0 =...
		24.4 Projects of Finite (Arbitrary) Duration
			24.4.1 The Dependence of the Efficiency of Investments NPV on the Level of Debt Financing L for the Values of Equity Costs k0 ...
			24.4.2 The Dependence of the Efficiency of Investments NPV on the Level of Debt Financing L for the Values of Equity Costs k0 ...
		24.5 The Dependence of the Net Present Value, NPV, on the Leverage Level l for Projects of Different Durations
		24.6 Conclusions
		References
	Chapter 25: The Golden Age of the Company (Three Colors of Company´s Time)
		25.1 Dependence of WACC on the Age of the Company n at Different Leverage Levels
		25.2 Dependence of WACC on the Age of the Company n at Different Values of Capital Costs (Equity, k0, and Debt, kd) and Fixed ...
		25.3 Dependence of WACC on the Age of the Company n at Different Values of Debt Capital Cost, kd, and Fixed Equity Cost, k0, a...
		25.4 Dependence of WACC on the Age of the Company n at Different Values of Equity Cost, k0, and Fixed Debt Capital Cost, kd, a...
		25.5 Dependence of WACC on the Age of the Company n at High Values of Capital Cost (Equity, k0, and Debt, kd) and High Lifetim...
		25.6 Further Investigation of Effect
		25.7 Conclusions
		References
	Chapter 26: A ``Golden Age´´ of the Companies: Conditions of Its Existence
		26.1 Introduction
		26.2 Companies Without the ``Golden Age´´ (Large Difference Between k0 and kd Costs)
			26.2.1 Dependence of Weighted Average Cost of Capital, WACC, on the Company Age n at Different Leverage Levels
		26.3 Companies with the ``Golden Age´´ (Small Difference Between k0 and kd Costs)
		26.4 Companies with Abnormal ``Golden Age´´ (Intermediate Difference Between k0 and kd Costs)
		26.5 Comparing with Results from Previous Chapter
			26.5.1 Under Change of the Debt Capital Cost, kd
			26.5.2 Under Change of the Equity Capital Cost, k0
		26.6 Conclusions
		References
	Chapter 27: New Meaningful Effects in Modern Capital Structure Theory
		27.1 Introduction
		27.2 Comparision of Modigliani-Miller (MM) and Brusov-Filatova-Orekhova (BFO) Results
			27.2.1 The Traditional Approach
			27.2.2 Modigliani-Miller Theory
		27.3 Comparision of Modigliani-Miller Results (Perpetuity Company) with Myers Results (One Year Company) and Brusov-Filatova-O...
		27.4 Bankruptcy of the Famous Trade-off Theory
		27.5 The Qualitatively New Effect in Corporate Finance
			27.5.1 Perpetuity Modigliani-Miller Limit
			27.5.2 BFO Theory
		27.6 Mechanism of Formation of the Company Optimal Capital Structure
		27.7 ``A Golden Age´´ of the Company
		27.8 Inflation in MM and BFO Theories
		27.9 Effects, Connected with Tax Shields, Taxes and Leverage
		27.10 Effects, Connected with the Influence of Tax on Profit Rate on Effectiveness of Investment Projects
		27.11 Influence of Growth of Tax on Profit Rate
		27.12 New Approach to Ratings
		References
Part III: Ratings and Rating Methodologies of Non-financial Issuers
	Chapter 28: Rating: New Approach
		28.1 Introduction
		28.2 The Closeness of the Rating Agencies
		28.3 The Use of Discounting in the Rating
		28.4 Incorporation of Parameters, Using in Ratings, into Perpetuity Limit of Modern Theory of Capital Structure by Brusov-Fila...
		28.5 Models
			28.5.1 One-Period Model
			28.5.2 Multi-Period Model
		28.6 Theory of Incorporation of Parameters, Using in Ratings, into Perpetuity Limit of Modern Theory of Capital Structure by B...
			28.6.1 Coverage Ratios
				28.6.1.1 Coverage Ratios of Debt
				28.6.1.2 Coverage Ratios of Interest on the Credit
				28.6.1.3 Coverage Ratios of Debt and Interest on the Credit (New Ratios)
			28.6.2 More Detailed Consideration
			28.6.3 Leverage Ratios
				28.6.3.1 Leverage Ratios for Debt
				28.6.3.2 Leverage Ratios for Interest on Credit
				28.6.3.3 Leverage Ratios for Debt and Interest on Credit
		28.7 Equity Cost
		28.8 How to Evaluate the Discount Rate?
			28.8.1 Using One Ratio
			28.8.2 Using a Few Ratios
		28.9 Influence of Leverage Level
			28.9.1 The Dependence of Equity Cost ke on Leverage Level at Two Coverage Ratio Values ij = 1 and ij = 2
		28.10 The Dependence of Equity Cost ke on Leverage Level at Two Leverage Ratio Values lj = 1 and lj = 2
		28.11 Conclusion
		References
	Chapter 29: Rating Methodology: New Look and New Horizons
		29.1 Introduction
		29.2 The Analysis of Methodological and Systemic Deficiencies in the Existing Credit Rating of Non-financial Issuers
			29.2.1 The Closeness of the Rating Agencies
			29.2.2 Discounting
			29.2.3 Dividend Policy of the Company
			29.2.4 Leverage Level
			29.2.5 Taxation
			29.2.6 Account of the Industrial Specifics of the Issuer
			29.2.7 Neglect of Taking into Account the Particularities of the Issuer
			29.2.8 Financial Ratios
		29.3 Modification of the BFO Theory for Companies and Corporations of Arbitrary Age for Purposes of Ranking
		29.4 Coverage Ratios
			29.4.1 Coverage Ratios of Debt
			29.4.2 The Coverage Ratio on Interest on the Credit
			29.4.3 Coverage Ratios of Debt and Interest on the Credit (New Ratios)
			29.4.4 All Three Coverage Ratios Together
		29.5 Coverage Ratios (Different Capital Cost Values)
			29.5.1 Coverage Ratios of Debt
			29.5.2 The Coverage Ratio on Interest on the Credit
			29.5.3 Coverage Ratios of Debt and Interest on the Credit (New Ratios)
			29.5.4 Analysis and Conclusions
		29.6 Leverage Ratios
			29.6.1 Leverage Ratios for Debt
			29.6.2 Leverage Ratios for Interest on Credit
		29.7 Leverage Ratios (Different Capital Costs)
			29.7.1 Leverage Ratios for Debt
			29.7.2 Leverage Ratios for Interests on Credit
			29.7.3 Leverage Ratios for Debt and Interests on Credit
			29.7.4 Analysis and Conclusions
		29.8 Conclusions
		References
	Chapter 30: Application of the Modigliani-Miller Theory, Modified for the Case of Advance Payments of Tax on Profit, in Rating...
		30.1 Introduction
		30.2 Modified Modigliani-Miller Theory
		30.3 Application of Modified Modigliani-Miller Theory for Rating Needs
			30.3.1 Coverage Ratios
				30.3.1.1 Coverage Ratios of Debt
				30.3.1.2 Coverage Ratios of Interest on the Credit
				30.3.1.3 Coverage Ratios of Debt and Interest on the Credit
			30.3.2 Dependence of WACC on Leverage Ratios of Debt in ``Classical´´ Modigliani-Miller Theory (MM Theory) and Modified Modigl...
			30.3.3 Leverage Ratios
				30.3.3.1 Leverage Ratios for Debt
				30.3.3.2 Leverage Ratios for Interest on Credit
				30.3.3.3 Leverage Ratios for Debt and Interest on Credit
				30.3.3.4 Dependence of WACC on Leverage Ratios of Debt in ``Classical´´ Modigliani-Miller Theory (MM Theory) and Modified Modi...
		30.4 Discussions
		References
Part IV: Ratings and Rating Methodologies of the Investment Projects
	Chapter 31: Ratings of the Investment Projects of Arbitrary Durations: New Methodology
		31.1 Introduction
		31.2 Investment Models
			31.2.1 The Effectiveness of the Investment Project from the Perspective of the Equity Holders Only (Without Flows Separation)
		31.3 Incorporation of Financial Coefficients, Using in Project Rating into Modern Investment Models, Describing the Investment...
			31.3.1 Coverage Ratios
				31.3.1.1 Coverage Ratios of Debt
				31.3.1.2 Coverage Ratios of Interest on the Credit
				31.3.1.3 Coverage Ratios of Debt and Interest on the Credit
			31.3.2 Leverage Ratios
				31.3.2.1 Leverage Ratios for Debt
				31.3.2.2 Leverage Ratios for Interest on Credit
				31.3.2.3 Leverage Ratios for Debt and Interest on Credit
		31.4 Results and Analysis
			31.4.1 Dependence of NPV/D on Coverage Ratios
				31.4.1.1 The Dependence of NPV on Coverage Ratio on Debt i1
				31.4.1.2 The Dependence of NPV on Leverage Ratio on Debt l1
				31.4.1.3 The Dependence of NPV on Coverage Ratio on Debt i1 at Different Values of kd
				31.4.1.4 The Dependence of NPV/NOI on Leverage Ratio on Debt l1 at Different Values of kd
		31.5 Conclusion
		References
	Chapter 32: Ratings of Investment Projects of Arbitrary Duration with a Uniform Debt Repayment: A New Approach
		32.1 Introduction
		32.2 Incorporation of Financial Ratios Used in Project Rating into Modern Investment Models with Uniform Repayment of Debt
			32.2.1 Coverage Ratios
				32.2.1.1 Coverage Ratios of Debt
				32.2.1.2 Coverage Ratios of Interest on the Credit
				32.2.1.3 Coverage Ratios of Debt and Interest on the Credit (New Parameter)
			32.2.2 Leverage Ratios
				32.2.2.1 Leverage Ratios for Debt
				32.2.2.2 Leverage Ratios for Interest on Credit
				32.2.2.3 Leverage Ratios for Debt and Interest on Credit
			32.2.3 Perpetuity Limit
			32.2.4 The Study of the Dependence of the Net Present Value of the Project, NPV, on Rating Parameters
				32.2.4.1 Investigation of the Dependence of the Net Present Value of the Project, NPV (in Units of Debt D) on Coverage Ratios
				32.2.4.2 Study of the Dependence of the Net Present Value of the Project NPV (in Units of Net Operating Income NOI) on Leverag...
		32.3 Conclusions
		References
	Chapter 33: Conclusions
		References