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

Nicholas X. Wonder, Paul Fieten, Lutz Kruschwitz and Y Otros (ver Lista Abajo)

No 2163, Proyecciones Financieras y Valoración from Master Consultores

Abstract: 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.

Keywords: Present value of tax shield; perpetuities (search for similar items in EconPapers)
JEL-codes: G31 G32 H43 (search for similar items in EconPapers)
Pages: 5
Date: 2003-12-31
References: Add references at CitEc
Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:col:000463:002163

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