A dynamic model of the firm with uncertain earnings and adjustment costs (Q1330542)

This paper is an extension of a stochastic dynamic model of a firm developed by Benssoussan and Lesourne by incorporating adjustment costs. It deals with the influence of uncertain earnings and adjustment costs on the optimal investment dividend and saving policies of a firm. The possibility of bankruptcy, that means the first time, that cash is negative, is also regarded. The optimal solution is derived for different scenarios. It turns out that, besides pure investment, dividend and saving policies, mixed policies can also be optimal for a firm.