User cost of capital with delayed investment grants
The usual assumption when considering investment grants is that grant payments are automatic when investments are undertaken. However, evidence from case studies shows that there can exist some time lag until funds are received by granted firms. In this paper the effects of delays in grant payments on the optimal investment policy of the firm are analyzed. It is shown how these delays lead not only to a higher financing cost but to an effective reduction in the investment grant rate, and in some cases, how benefits from investment grants could be canceled due to interactions with tax effects.
|Date of creation:||2006|
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- Ruane, Frances P., 1982. "Corporate income tax, investment grants, and the cost of capital," Journal of Public Economics, Elsevier, vol. 17(1), pages 103-109, February.
- repec:ner:tilbur:urn:nbn:nl:ui:12-153450 is not listed on IDEAS
- Treadway, Arthur B, 1969. "On Rational Entrepreneurial Behaviour and the Demand for Investment," Review of Economic Studies, Wiley Blackwell, vol. 36(106), pages 227-39, April.
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- Kort, Peter, 1988. "Optimal dynamic investment policy under financial restrictions and adjustment costs," Other publications TiSEM 38929238-c28e-4196-9b5b-6, School of Economics and Management.
- Kort, P.M., 1985. "Optimal dynamic investment policy under financial restrictions and adjustment costs," Research Memorandum FEW 195, School of Economics and Management.
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