Cost of Capital with Levered Cost of Equity as the Risk of Tax Shields

We present the derivation of cost of capital under the assumption of risky tax shields discounted with the cost of levered equity. We show that the formulation is consistent and is derived from basic financial principles. This formulation is valid for finite cash flows and non growing perpetuities. In addition, it can be calculated without the circularity between value and discount rate.The Spanish version of this paper can be found at http://ssrn.com/abstract=1684488

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Year of publication:	2011
Authors:	Tham, Joseph
Other Persons:	Velez-Pareja, Ignacio (contributor) ; Kolari, James W. (contributor)
Publisher:	[2011]: [S.l.] : SSRN
Subject:	Kapitalkosten \| Cost of capital \| Kapitalstruktur \| Capital structure \| CAPM \| Fremdkapital \| Debt financing

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Extent:	1 Online-Ressource (11 p)
Series:	Mays Business School Research Paper ; No. 2011-12
Type of publication:	Book / Working Paper
Language:	English
Notes:	Nach Informationen von SSRN wurde die ursprüngliche Fassung des Dokuments December 25, 2010 erstellt
Other identifiers:	10.2139/ssrn.1655244 [DOI]
Classification:	M21 - Business Economics ; M4 - Accounting and Auditing ; m46 ; M41 - Accounting ; G12 - Asset Pricing ; G31 - Capital Budgeting; Investment Policy ; J33 - Compensation Packages; Payment Methods
Source:	ECONIS - Online Catalogue of the ZBW

Persistent link: https://www.econbiz.de/10013133138