Within modern theory of capital cost and capital structure by Brusov–Filatova–Orekhova (BFO theory) (Brusov et al., Appl Financ Econ 21(11):815–824, 2011a, Res J Econ Bus ICT 2:16–21, 2011b, Res J Econ Bus ICT (UK) 2:11–15, 2011c, Finance Credit 435:2–8, 2011d, Appl Financ Econ 22 (13):1043–1052, 2012a, J Rev Glob Econ 1:106–111, 2012b, J Rev Glob Econ 2:94–116, 2013a, J Rev Glob Econ 2:183–193, 2013b, Cogent Econ Finance 2:1–13, 2014a, J Rev Glob Econ 3:175–185, 2014b; Filatova et al., Bull FU 48:68–77, 2008) and created within this theory modern investment models influence of growth of tax on profit rate on the efficiency of the investment is investigated. It has been shown that for long-term investment projects, as well as for arbitrary duration projects the growth of tax on profit rate change the nature of the NPV dependence on leverage at some value t*: there is a transition from diminishing function NPV(L) when t < t* to growing function NPV(L). The t* value depends on the duration of the project, cost of capital (equity and debt) values, and other parameters of the project.
At high leverage levels, this leads to qualitatively new effect in investments: growth of the efficiency of the investments with growth of tax on profit rate. Discovered effects take place under consideration from the point of view of owners of equity capital as well as from the point of view of owners of equity and debt capital.
