The Problem of pre-tax valuations: a note

Michael Dempsey; Michael McKenzie; Graham Partington

The Problem of pre-tax valuations: a note

Michael Dempsey, Michael McKenzie, Graham Partington

Research output: Contribution to journal › Article › peer-review

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
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

Cite this

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title = "The Problem of pre-tax valuations: a note",

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.",

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M3 - Article

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VL - 5

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EP - 13

JO - Journal of applied research in accounting and finance

JF - Journal of applied research in accounting and finance

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The Problem of pre-tax valuations: a note

Abstract

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