[01] P. N. Brusov, Applied Mathematics Department, Financial University under the Government of Russian Federation, Moscow, Russia. [02] T. V. Filatova, Public Administration and Municipal Management, Faculty, Financial University under the Government of Russian Federation, Moscow, Russia. [03] N. P. Orekhova, High School of Business, Southern Federal University; Investment and Taxation Laboratory, Research Consortium of Universities of the South of Russia, Rostov-on-Don, Russia. [04] M. A. Eskindarov, Financial University under the Government of Russian Federation, Moscow, Russia. [05] V. L. Kulik, Management Department, Financial University under the Government of Russian Federation, Moscow, Russia.

In this paper the role of tax shield, taxes and leverage in the modern theory of the corporative finance is investigated. Modigliani–Miller theory, as well as modern theory of capital cost and capital structure by Brusov – Filatova – Orekhova are considered. It is shown, that the equity cost as well as the weighted average cost of capital decrease with the tax rate, while the capitalization increases. The detailed investigation of the dependence of the weighted average cost of capital WACC and the equity cost ke on the tax rate at fix leverage (debt capital fraction wd) and on the leverage level at fix tax rate, as well as the dependence of and ke on company lifetime is made. We have introduced the concept of tax operation leverage. For companies with finite life-time a number of important qualitative effects, which have no analogies at perpetuity companies is found.

Taxes, Leverage Level, Brusov-Filatova-Orekhova (BFO Theory), Modigliani–Miller Theory

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