Farber, Andre
[VerfasserIn]
;
Gillet, Roland L.
[Sonstige Person, Familie und Körperschaft];
Szafarz, Ariane
[Sonstige Person, Familie und Körperschaft]
Anmerkungen:
In: International Journal of Business, Vol. 11, No. 2, 2006
Beschreibung:
Recent controversies testify that the tax shield valuation remains a hot topic in the financial literature. Basically, two methods have been proposed to incorporate the tax benefit of debt in the present value computation: The adjusted present value (APV), and the classical weighted average cost of capital (WACC). This note clarifies the relationship between these two apparently different approaches by offering a general formula for the WACC. This formula encompasses earlier results obtained by Modigliani and Miller (1963) and Harris and Pringle (1985)