What Tax rate to use in a DCF?
If a company is currently not profitable and unlikely to be for the next 2-3 years, what tax rate do we use in the DCF when we tax EBIT? Is it reasonable to just use the long term tax rate?
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As company generates NOLs in unprofitable years it will accrue DTAs, which you must value using appropriate tax rates. Damodaran suggest using corporate marginal tax rate, since long-term you will have to become profitable.
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