Valuing a rms capital structure using prot caps, oors and bond default options
نویسندگان
چکیده
Despite many past papers concerning a rms capital structure, the valuation of debt and equity and cost of capital, there are few that explicitly codify contingent sharing rules for the rms cashow over time. We motivate equity and debt valuation by modeling tax and distress costs using cap and oor technology as well as a default option at maturity. This approach sheds light on theoretical valuation issues, optimal capital structure choice as well as a rms component costs of capital. JEL: G13, G33, G35.
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