The optimal capital structure in agricultural cooperatives under the revolving fund cycles
Due to the fi nancial features specifi c to agricultural cooperatives, the paper constructs a constrained maximizing model under the assumption that the fi nancial objective of an agricultural cooperative is to maximize the present value of the patron after tax total income on an infi nite time horizon by choosing the dividend rate, the cash patronage refund rate, and the length of the revolving fund cycles. Th e model is solved numerically in a numerical illustration. In equilibrium, the optimal capital structure is derived for the agricultural cooperative. Th e eff ects of the changes in personal tax rates and dis count rates are also explored.