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In this chapter the influence of inflation on capital cost and capitalization of the company within modern theory of capital cost and capital structure—Brusov–Filatova–Orekhova theory (BFO theory) (Brusov and Filatova, Finance Credit 435:2–8, 2011; Brusov et al., Appl Financ Econ 21:815–824, 2011a; Brusov et al., Res J Econ Business ICT 2:16–21, 2011b; Brusov et al., Res J Econ Business ICT (UK) 2:11–15, 2011c; Brusov et al., Appl Financ Econ 22:1043–1052, 2012a; Brusov et al., J Rev Glob Econ 1:106–111, 2012b; Brusov et al., J Rev Glob Econ 2:94–116, 2013a; Brusov et al., J Rev Glob Econ 2:183–193, 2013b; Brusov et al., Cogent Econ Finance 2:1–13, 2014a; Brusov et al., J Rev Glob Econ 3:175–185, 2014b; Filatova et al., Bull FU 48:68–77, 2008) and within its perpetuity limit—Modigliani–Miller theory (Modigliani and Miller, Am Econ Rev 48:261–297, 1958; Modigliani and Miller, Am Econ Rev 53:147–175, 1963; Modigliani and Miller, Am Econ Rev 56:333–391, 1966) is investigated. By direct incorporation of inflation into both theories, it is shown for the first time, that inflation not only increases the equity cost and the weighted average cost of capital, but as well it changes their dependence on leverage. In particular, it increases growing rate of equity cost with leverage. Capitalization of the company is decreased under accounting of inflation.

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Inflation in Brusov–Filatova–Orekhova Theory and in Its Perpetuity Limit: Modigliani–Miller Theory

  • 章节

  • 发表日期：

    2025年

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  • Peter Brusov,
  • Tatiana Filatova

摘要

In this chapter the influence of inflation on capital cost and capitalization of the company within modern theory of capital cost and capital structure—Brusov–Filatova–Orekhova theory (BFO theory) (Brusov and Filatova, Finance Credit 435:2–8, 2011; Brusov et al., Appl Financ Econ 21:815–824, 2011a; Brusov et al., Res J Econ Business ICT 2:16–21, 2011b; Brusov et al., Res J Econ Business ICT (UK) 2:11–15, 2011c; Brusov et al., Appl Financ Econ 22:1043–1052, 2012a; Brusov et al., J Rev Glob Econ 1:106–111, 2012b; Brusov et al., J Rev Glob Econ 2:94–116, 2013a; Brusov et al., J Rev Glob Econ 2:183–193, 2013b; Brusov et al., Cogent Econ Finance 2:1–13, 2014a; Brusov et al., J Rev Glob Econ 3:175–185, 2014b; Filatova et al., Bull FU 48:68–77, 2008) and within its perpetuity limit—Modigliani–Miller theory (Modigliani and Miller, Am Econ Rev 48:261–297, 1958; Modigliani and Miller, Am Econ Rev 53:147–175, 1963; Modigliani and Miller, Am Econ Rev 56:333–391, 1966) is investigated. By direct incorporation of inflation into both theories, it is shown for the first time, that inflation not only increases the equity cost and the weighted average cost of capital, but as well it changes their dependence on leverage. In particular, it increases growing rate of equity cost with leverage. Capitalization of the company is decreased under accounting of inflation.