the Weirdness and Absurdity of a Specific theory on the Present Value of the Tax Benefits (PVTB) from Debt Financing

9 Pages Posted: 6 May 2019

See all articles by Joseph Tham

Joseph Tham

Educational Independent Consultant

Ignacio Velez-Pareja

Grupo Consultor CAV Capital Advisory & Valuation

Date Written: April 15, 2019

Abstract

In 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 theory does not automatically disqualify a theory; however, perhaps another review of the implications of the theory may have some merit. It seems that the definition of the present value of the tax benefits (PVTB) was revised to accommodate pre-existing ideas; perhaps the new theory is masquerading as a sort of reverse engineering.

Keywords: Financial modeling, Valuation, Weighted Average Cost of Capital (WACC), Free Cash Flow (FCF), Risk of the Tax Shield

JEL Classification: D61, H43, M21, M40, M46, G12, G31, G33

Suggested Citation

Tham, Joseph and Velez-Pareja, Ignacio, the Weirdness and Absurdity of a Specific theory on the Present Value of the Tax Benefits (PVTB) from Debt Financing (April 15, 2019). Available at SSRN: https://ssrn.com/abstract=3372093 or http://dx.doi.org/10.2139/ssrn.3372093

Joseph Tham (Contact Author)

Educational Independent Consultant ( email )

Ignacio Velez-Pareja

Grupo Consultor CAV Capital Advisory & Valuation ( email )

Ave Miramar # 18-93 Apt 6A
Cartagena
Colombia
+573112333074 (Phone)

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