Posted: 30 Dec 2004
Fernandez (2004) 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
Fieten, Paul and Velez-Pareja, Ignacio and Kruschwitz, Lutz and Laitenberger, Jörg and Loeffler, Andreas and Tham, Joseph and Wonder, Nicholas X., Comment on 'The Value of Tax Shields is NOT Equal to the Present Value of Tax Shields'. Quarterly Review of Economics and Finance, Vol. 45, February 2005. Available at SSRN: https://ssrn.com/abstract=636901