7 Pages Posted: 25 Nov 2003
Date Written: November 21, 2003
In a forthcoming paper, Fernandez (2002) claims to derive a formula for the valuation of debt tax shields for firms with cash flows that grow perpetually at a constant rate. We show that his formula is incorrect.
Keywords: Present value of tax shield, perpetuities
JEL Classification: G31, G32, H43
Suggested Citation: Suggested Citation
Wonder, Nicholas X. and Velez-Pareja, Ignacio and Tham, Joseph and Loeffler, Andreas and Fieten, Paul, Revised Comment on 'The Value of Tax Shields is NOT Equal to the Present Value of Tax Shields' (November 21, 2003). Available at SSRN: https://ssrn.com/abstract=471062 or http://dx.doi.org/10.2139/ssrn.471062