Revised Comment on 'The Value of Tax Shields is NOT Equal to the Present Value of Tax Shields'

7 Pages Posted: 25 Nov 2003  

Nicholas X. Wonder

Western Washington University - College of Business & Economics

Ignacio Velez-Pareja

Grupo Consultor CAV Capital Advisory & Valuation

Joseph Tham

Duke University - Duke Center for International Development in the Sanford School of Public Policy

Andreas Loeffler

Freie Universität Berlin

Paul Fieten

Ernst & Young, The Netherlands

Date Written: November 21, 2003

Abstract

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

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

Nicholas X. Wonder (Contact Author)

Western Washington University - College of Business & Economics ( email )

Department of Finance and Marketing
Bellingham, WA 98225-9071

Ignacio Velez-Pareja

Grupo Consultor CAV Capital Advisory & Valuation ( email )

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

HOME PAGE: http://cashflow88.com/decisiones/decisiones.html

Joseph Tham

Duke University - Duke Center for International Development in the Sanford School of Public Policy ( email )

Box 90312
302, Towerview Dr, Rubenstein Hall, Room 272
Durham, NC 27708
United States
919-613-9234 (Phone)
919-681-0831 (Fax)

HOME PAGE: http://fds.duke.edu/db/Sanford/faculty/thamjx

Andreas Loeffler

Freie Universität Berlin ( email )

Boltzmannstr. 20
Berlin, 14195
Germany

HOME PAGE: http://www.andreasloeffler.de

Paul Fieten

Ernst & Young, The Netherlands ( email )

Postbus 488
Rotterdam, 3000 AL
Netherlands

Paper statistics

Downloads
369
Rank
62,771
Abstract Views
2,610