Abstract
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 language | English |
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Pages (from-to) | 10-13 |
Number of pages | 4 |
Journal | Journal of applied research in accounting and finance |
Volume | 5 |
Issue number | 2 |
Publication status | Published - 2010 |
Externally published | Yes |