We show how to calculate the after-tax value of real options, including the value of interest tax shields on debt supported or displaced by the options. An option's “debt capacity” can be calculated from the adjusted present value (APV) and target debt ratio for the underlying asset, the...

We show how the value of a real option depends on corporate income taxes and the option's "debt capacity," defined as the amount of debt supported or displaced by the option. The value of the underlying asset must be an adjusted present value (APV). The risk-free rate of interest must be...

We show how the value of a real option depends on corporate income taxes and the option's “debt capacity,” defined as the amount of debt supported or displaced by the option. The value of the underlying asset must be an adjusted present value (APV). The risk-free rate of interest must be...

We show how the value of a real option depends on corporate income taxes and the option's "debt capacity," defined as the amount of debt supported or displaced by the option. The value of the underlying asset must be an adjusted present value (APV). The risk-free rate of interest must be...