Reply to 'The Value of Tax Shields IS Equal to the Present Value of Tax Shields'

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The value of tax shields IS equal to the present value of tax shields

Fernandez (2004b) argues that the present value effect of the tax saving on debt cannot be calculated as simply the present value of the tax shields associated with interest. This contradicts standard results in the literature. It implies that, even though the capital market is complete, value-additivity is violated. As a consequence, adjusted present value formulae of a standard sort cannot be...

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ژورنال

عنوان ژورنال: SSRN Electronic Journal

سال: 2004

ISSN: 1556-5068

DOI: 10.2139/ssrn.611501