Comment on 'The Value of Tax Shields is NOT Equal to the Present Value of Tax Shields', Including an Arbitrage Opportunity

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 and provide an example where his valuation would admit arbitrage.

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Year of publication:	2003-12-31
Authors:	Wonder, Nicholas X. ; Fieten, Paul ; Kruschwitz, Lutz ; otros, y
Institutions:	MASTER CONSULTORES
Subject:	Present value of tax shield \| perpetuities

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Series:	PROYECCIONES FINANCIERAS Y VALORACION.
Type of publication:	Book / Working Paper
Notes:	5 pages long
Classification:	G31 - Capital Budgeting; Investment Policy ; G32 - Financing Policy; Capital and Ownership Structure ; H43 - Project Evaluation; Social Discount Rate
Source:	RePEc - Research Papers in Economics

Persistent link: https://ebvufind01.dmz1.zbw.eu/10010763002