Financial decisions and taxes

Abstract

In the present paper we examine whether investment decisions and financial decisions can be separated. Our assumption is that if the amount of debt cannot cause any change of shareholder's value, then the two kinds of decisions can be separated. But the effect of borrowing money is so arborescent, that the specifics could only be cached, represented in the Capital Asset Pricing Model's (CAPM) word. With our novel approach we would also like to show a simple and widely useable tutorial method. © Periodica Polytechnica 2006.