The Problem of pre-tax valuations: a note

Michael Dempsey, Michael McKenzie, Graham Partington

Research output: Contribution to journalArticlepeer-review


This paper highlights the problems in valuation that are inherent in the use of the pre-tax cost of capital and in other tax adjustments to the discount rate. The source of problems in relation to the pre-tax discount rate is clarified and examples are given to highlight the nature of the problems. Finally, a solution is provided that overcomes these problems. However, it is recommended that pre-tax valuations are best avoided.
Original languageEnglish
Pages (from-to)10-13
Number of pages4
JournalJournal of applied research in accounting and finance
Issue number2
Publication statusPublished - 2010
Externally publishedYes


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