From PricewaterhouseCoopers Professor of Corporate Finance University of Navarra - IESE Business School, Spain
The value of tax shields is the difference of two present values with different risk
ABSTRACT
We show that the value of tax shields is the difference between the present values of two different cash flows with their own risk: the present value of taxes for the unlevered company and the present value of taxes for the levered company.
The value of tax shields is not equal to the present value of tax shields: a correction
Abstract
I correct some expressions of Fernandez (2004) and provide a more general expression for the value of tax shields. This expression is the difference between the present values of two different cash flows, each with its own risk: the present value of taxes for the unlevered company and the present ...
The Correct Value of Tax Shields. An Analysis of 23 Theories
This paper provides clear, theoretically sound, guidelines to evaluate the appropriateness of 23 different valuation methods to estimate the present value of tax shields.
We first show that the value of tax shields is the difference between the present values of two different cash flows with their own risk: the present ...