Pablo Fernandez
From PricewaterhouseCoopers Professor of Corporate Finance University of Navarra - IESE Business School, Spain
The value of tax shields and the risk of the net increase of debt
Abstract The value of tax shields depends upon the nature of the stochastic process of the net increase of debt, and does not depend upon the nature of the stochastic process of the free cash flow. The value of tax shields in a world with no leverage cost is the tax rate times the debt [...]
The value of tax shields is not equal to the present value of tax shields: a correction
Abstract I correct some expressions of Fernandez (2004) and provide a more general expression for the value of tax shields. This expression is the difference between the present values of two different cash flows, each with its own risk: the present value of taxes for the unlevered company and the present value of taxes for [...]
The value of tax shields is the difference of two present values with different risk
ABSTRACT We show that the value of tax shields is the difference between the present values of two different cash flows with their own risk: the present value of taxes for the unlevered company and the present value of taxes for the levered company. For perpetuities without costs of leverage, the value of tax shields [...]
