Fernandez (2002) asserts that the value of the tax shield, as given in equation, should be properly interpreted as the difference in the taxes paid by the unlevered and levered firms, where the taxes have different risk profiles. Let VTxU be the present value of the taxes paid by the ...
Present Value of the Tax Shield: A Note 来自 ResearchGate 喜欢 0 阅读量: 72 作者: Joseph Tham 摘要: In this note, the present value of the tax shield is reconsidered. In most corporate finance textbooks, it is commonly assumed that the discount rate for the ta DOI: 10.2139/ssrn....
In a recent paper, Fernandez (2004a) argues that the present value effect of the tax saving on debt cannot be calculated as simply the present value of the tax shields associated with interest. This contradicts standard results in the literature. It implies that, even though the capital market...
APV = Project value if all equity financed + Present value of the tax shield from any debt ± Present value of other side effects 2 Approach (a) Calculate the operational value of the project as if it were being financed only by equity—"Base Case NPV". (b) Calculate the present value...
Step 2: Calculate the Present Value (PV) of the Tax Shield The annual interest payment on the debt is as follows: Annual Interest = $400,000 × 8% = $32,000 The annual tax shield is as follows: Annual Tax Shield = $32,000 × 30% = $9,600 ...
百度试题 题目The present value of the depreciation tax shield for the fourth year MACRS depreciation of Crane Company’s new asset is A. 0 B. 6,112 C. 6,608 D. 16,520 相关知识点: 试题来源: 解析 C 略 反馈 收藏
Adjusted Present ValueAdjusted present value is a valuation method which segregates the impact of financing cash flows such as debt tax shield on a project’s net present value by discounting non-financing cash flows and financing cash flows separately.The...
If we assume that, at this level of debt, bankruptcy and agency costs are negligible, then the NPV of the change in capital structure equals the present value of the tax shield minus any issue costs. 4 Adjusted Present Value: Example (cont’d) • For example, assume that the fi...
Risk of the Tax ShieldIn this note, we comment on and discuss the weirdness and absurdity of the idea that Professor Fernandez has argued for. The weirdness or absurdity of a theorydoi:10.2139/ssrn.3372093Tham, JosephVelez-Pareja, Ignacio...
刷刷题APP(shuashuati.com)是专业的大学生刷题搜题拍题答疑工具,刷刷题提供If the present value of the interest tax shield equals the present value of the costs of financial distress, then the:A.firm should increase its use of debt.B.firm's market value equa