Research ArticleOpen accessIn the keywordsInvestment, Taxes and the Cost of Capital: An Euler Equation Specification TestHuntley SchallerProblem statement: Previous studies (primarily employing goodness-of-fit tests) have found it difficult to provide clear and direct evidence that taxes and the interest rate have a strong influence on investment. Approach: The objective of this study was to test whether the cost of capital, which includes taxes and the interest rate, affects investment. This study used the Euler equation for … …American Journal of Economics and Business Administration, Vol. 2, Issue 3 · 30 Sep 2010 · 7,616 accessesView PDFCite