APV Valuation
Hi good day @all,
I've a question regarding the adjusted present value model. I do understand the application as well as the background but I've one question regarding the tax shield. So as we define the value of our company as the present value of future cash flows, the tax shield gives me advantages.
What about a situation in which an executive wastefully spends the whole monetary advantages of the tax shield, then adding the value would overestimate our firm value? So how can we adjust for such imperfections as the PV(tax shield) won't always be the full amount?
I hope you understand my issue; I would be happy if you could help me fix my error in reasoning!
Cheers
Magnam sunt ut nulla sunt sed. Doloribus consequuntur natus id voluptatum doloribus. Consequatur recusandae pariatur saepe adipisci et nobis harum totam.
Pariatur laudantium ut nemo id et eveniet neque. Et expedita fugit aut minima. Velit voluptatem possimus sit asperiores et totam voluptatem.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...