Debt financing of investment projects, used to complete internal sources, has benefits that increase company value (tax shields from interest payments deduction), but also implies costs of financial distress (bankruptcy costs and agency costs) that decrease market value of debt and company value. In this paper, we discuss how taxes affect financial structure choice and we estimate tax shields from debt financing for an investment in real assets, using four different models developed in financial literature.

real assets investments, debt financing, tax shields, marginal tax rate