Pablo Fernandez

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 ...

Abstract

The value of tax shields depends upon the nature of the stochastic process of the net increase of debt, and does not depend upon the nature of the stochastic process of the free cash flow.

The value of tax shields in a world with no leverage cost is the tax rate ...

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 ...

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.

For perpetuities without costs of leverage, the value ...