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| Author: | Wallmeier, M. |
| Title: | Kapitalkosten und Finanzierungsprämissen |
| Journal: | Zeitschrift für Betriebswirtschaft
1999 : VOL. 69:12, p. 1473-1490 |
| Index terms: | VALUATION DISCOUNTED CASH FLOW DEBT DISCOUNT RATE |
| Language: | ger |
| Abstract: | The theory of valuation differentiates between three variants of the discounted cash flow method: the entity, equity and adjusted present value approach. The value impact of taxation is dependent on the company's intertemporal financing policy. If the management maintains a given debt/ equity ratio, the amount of debt outstanding in later periods and the size of the tax shields are stochastic. Thus the appropriate discount rate is different from the risk- free rate used to discount deterministic tax shields. The tax shields are deterministic if the management fixes the absolute dollar amount of debt outstanding. Under the stan- dard assumptions often used in the literature each of the two financing strategies leads to equivalent pricing formu- las for the three variants of the discounted cash flow me- thod |
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