Question Regarding APV valuation and Interest Tax Shields
Hey guys,
I'm new to this site, and I searched around for about an hour and I couldn't find a direct response to the question I had so I'm going ahead and posting the question. I apologize if there's already a similar thread -- I really couldn't find it.
I was going through the Vault Guide to Finance Interviews, and I'm confused about the part where you add in the interest tax shield value into the APV. Here is what the section says: (see attached image)
But... the math doesn't add up. And when I google how to do it, I get a lot of different answers, none of which seem to lead me to the answer given here. I'm not quite sure which answer is the correct way.
I was wondering if anyone could give me a proper instruction on how to calculate the interest tax shield when using APV valuation (yes I know it's not used in real world ibanking, but I would still like to know how to do it correctly).
Thank you
Slides 3-5
http://www.google.com/url?sa=t&rct=j&q=%22the%20value%20of%20a%20projec…
Hope this helps.
I have the same question...dont understand how should we calculate the tax shield for APV method, especially the one in vault guide example, numbers just dont add up! Any help?
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