Investment Valuation with Tax-optimized Financing Decisions and a Tax-optimized Default Alternative

In this paper we evaluate an indivisible investment project that is carried out in a corporation under very simple premises. In particular, we discuss a one-period model with certainty, the pure domestic case and proportional tax rates. Surprisingly, the decision problem turns out to be rather complex if one has to make allowance for different taxation of the corporation and its owner. Altogether there are more than 10 cases that have to be distinguished if the firm's managers want to make a correct decision, depending on the relation of personal and corporate tax rates.

Profiting from the Cattle Cycle: Alternative Cow Herd Investment Strategies

Beef cow herd owners can benefit from incorporating price signals into their heifer retention decisions. Whereas a perfect forecast of calf prices over the productive life of the heifer added to the herd would be ideal, such information is not available. However, simple decision rules that incorporate current or recent prices and the knowledge that the cattle cycle likely will repeat itself can help producers improve their investment decisions. A dollar cost averaging strategy that retains the same dollar value of heifers each year and a rolling average value strategy that retains a 10-year average value of heifers out performed strategies that sought to maintain a constant herd size or a constant cash flow.

Alternative Cow Herd Investment Strategies: Constant Size and Constant Investment

Two heifer replacement strategies were compared over a 25-year period. One strategy retained the same number of heifers each year to maintain a constant herd size. The second strategy retained the same dollar value of heifer calves each year based on their opportunity cost as feeder calves. The constant investment strategy herd size varied throughout the period, but generated higher average profit and higher net worth than did the constant herd size strategy. Constant investment is a simple strategy to adjust the level of investment in beef cows and the resource base (pasture, labor, winter feed) in response to market signals driven by the cattle cycle. This strategy automatically increases heifer retention when the opportunity cost is low and reduces the number retained when cost is high. The effect is a lower average cost of cows in the herd, lower overall investment, and a higher net return on investment. Iowa producers, who often have greater flexibility in land use than producers in other major beef cow regions, can better utilize this strategy that generates greater profits and net worth growth.

Subordinate removal affects parental investment, but not offspring survival in a cooperative cichlid

Summary Subordinates in cooperative breeding systems may provide help to dominant pairs, who can benefit by either an increased total investment in their current brood or a reduced personal contribution to this investment. In the social cichlid Julidochromis ornatus, one large male subordinate generally spends 90% of his time in close proximity to the breeding shelter, whereas the dominants only spend 50% of their time close to the shelter. We experimentally removed the large subordinate for 30 days (approximating one breeding cycle) to study the investment strategies of dominants and the effects on offspring survival, while accounting for subordinate immigration. Experimental groups were compared with control groups, from which subordinates were also caught but not removed. On day one following removal, we tested whether dominants overcompensated, fully compensated or undercompensated for absence of the subordinate on several parental behaviours. Moreover, we tested whether the pairs' potential compensatory behaviour remained high seven days following large subordinate removal. One day following removal, dominants increased their time spent in the territory and their frequency of breeding shelter visits and defence, compared with the pre-removal phase and control groups. The dominant pair overcompensated for the loss of subordinate help in their breeding shelter visits, fully compensated in defence and undercompensated their time spent in the territory. Seven days after large subordinate removal, behavioural differences between treatments had disappeared. However, when distinguishing between groups with or without a new immigrant subordinate, dominant pairs only diminished investment in the presence of an immigrant, suggesting a compensatory role of the large subordinate. Finally, survival of juvenile group members was not affected by the treatment. Our experiments indicate that the presence of a large subordinate does not increase the dominant pairs' current reproductive success, but instead allows them to reduce their personal contribution to investment in the current brood. In addition, we illustrate that dominants may show strikingly different compensatory responses depending on the type of behaviour and emphasize the importance of immigrant subordinates to relieve dominants from costly compensatory responses in cooperative breeding systems.