Financial Literature About Discounted Cash Flow Valuation

IESE Business School Working Paper No. 606

24 Pages Posted: 14 Jun 2005

See all articles by Pablo Fernandez

Pablo Fernandez

University of Navarra - IESE Business School

Date Written: July 2005

Abstract

There is a wealth of literature about discounted cash flow valuation. In this paper, we will discuss the most important papers, highlighting those that propose different expressions for the value of the tax shield (VTS). The discrepancies between the various theories on the valuation of a company's equity using discounted cash flows originate in the calculation of the value of the tax shield (VTS). This paper illustrates and analyzes 7 different theories and presents a new interpretation of the theories.

Keywords: Discounted cash flow valuation, cash flow valuation, value of tax shields, present value of the net increases of debt, required return to equity

JEL Classification: G12, G31, G32

Suggested Citation

Fernandez, Pablo, Financial Literature About Discounted Cash Flow Valuation (July 2005). Available at SSRN: https://ssrn.com/abstract=743205 or http://dx.doi.org/10.2139/ssrn.743205

Pablo Fernandez (Contact Author)

University of Navarra - IESE Business School ( email )

Camino del Cerro del Aguila 3
28023 Madrid
Spain
+34 91 357 0809 (Phone)
+34 91 357 2913 (Fax)

HOME PAGE: http://web.iese.edu/PabloFernandez/

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