The impact of taxation on upper and lower bounds ofenterprise value

This paper derives and draws on simple formulae for the upper and lower bounds tothe value of a series of risky cash flows in order to provide some instructive insights intothe impact of taxation on these bounds.The formulae are based on no-arbitrage conditions in a setting that is a straightforwardextension of the COX, ROSS, AND RUBINSTEIN [2] option-pricing model to an incompletemarket model and look exactly like the popular GORDON growth formula.Although based on stylized facts concerning the tax scheme the results promise to be areliable guide for further research in this field.