Vélez-Pareja, Ignacio; Tham, Joseph; Fernández, Viviana - In: Economic Analysis Working Papers (2002-2010). Atlantic … 4 (2005) October, pp. 1-19
In the Weighted Average Cost of Capital (WACC) applied to the free cash flow (FCF), we assume that the cost of debt is the market, unsubsidized rate. With debt at the market rate and perfect capital markets, debt only creates value in the presence of taxes through the tax shield. In some cases,...
