词条 | Tax shield |
释义 |
A tax shield is the reduction in income taxes that results from taking an allowable deduction from taxable income.[1] For example, because interest on debt is a tax-deductible expense, taking on debt creates a tax shield.[1] Since a tax shield is a way to save cash flows, it increases the value of the business, and it is an important aspect of business valuation. ExampleCase A
The concept was originally added to the methodology proposed by Franco Modigliani and Merton Miller for the calculation of the weighted average cost of capital of a corporation. Case B
The reason that he was able to earn additional income is because the cost of debt (i.e. 8% interest rate) is less than the return earned on the investment (i.e. 10%). The 2% difference makes income of $80 and another $100 is made by the return on equity capital. Total income becomes $180 which becomes taxable at 20%, leading to the net income of $144. Value of the Tax ShieldIn most business valuation scenarios, it is assumed that the business will continue forever. Under this assumption, the value of the tax shield is: (interest bearing debt) x (tax rate). Using the above examples:
See also
References1. ^1 {{cite journal|last=Kemsley|first=Deen|author2=Nissim, Doron |title=Valuation of the Debt Tax Shield|journal=The Journal of Finance|date=October 2002|volume=57|issue=5|pages=2045–2073|url=http://www.columbia.edu/~dn75/valuation%20of%20the%20debt%20tax%20shild.pdf|accessdate=25 March 2013|doi=10.1111/0022-1082.00488}} External links
2 : Debt|Tax terms |
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