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FCF Valution

This topic has 1 reply, 2 voices, and was last updated 8 years ago by John Moffat.

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May 30, 2016 at 12:15 pm #318120
Adam
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Am I right that When using FCF valuation method the amount deducted for tax should ignore any Tax shield benefit?
May 30, 2016 at 12:54 pm #318140
John Moffat
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Yes – you are correct.
The tax benefit is effectively included in the calculation of the WACC, because we use the after-tax cost of debt.
The tax shield is only relevant when calculating an APV.
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