Dividend or reinvestment when taxes are considered?

Holm, SörenSwedish University of Agricultural Sciences,Sveriges lantbruksuniversitet,Institutionen för skoglig resurshushållning,Department of Forest Resource Management (author)

The article analyzes theoretically how a firm maximizes the value of shareholder’s wealth with its policy for dividend/reinvestment of the profit from operations, when taxes are considered. In the study, the net present value, i.e. the present value after deduction for taxes, is used as objective function. Four different taxes are considered. The analysis shows the terms on which it is profitable to receive dividend payout or to reinvest at an arbitrary time. Under the assumption of a unique maximum net present value, the terms at the time for the maximum net present value are also presented. The article can be applied in forest economy.

Jonsson, BengtSwedish University of Agricultural Sciences,Sveriges lantbruksuniversitet,Institutionen för skoglig resurshushållning,Department of Forest Resource Management(Swepub:slu)93164 (author)
Sveriges lantbruksuniversitetInstitutionen för skoglig resurshushållning (creator_code:org_t)
Sveriges lantbruksuniversitet

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