Calculating tax shield for firms with tax loss carry-forward etc

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Permalink Reply by Kees on July 31, 2009 at 2:30pm

Hi,

The WACC does not work, for the tax-shield calculation. The most efficient way is to use the APV (adjusted present value) method. I use this method all the time. In normal situations the value is the same, but the APV-method is more flexible.

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Permalink Reply by Vikas Gangwal on August 2, 2009 at 2:50am

Hi Kees,

Thanks a lot for sharing your experience.

Can you put some more light on APV method of calculation. I have to use this method for some valuation purpose, and I just have a fair bit of idea about.

I would appreciate, if you can share some sample model or an example. You can mail me on vikasgangwal@gmail.com

Cheers!!!
Vikas Gangwal
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vikasgangwal@gmail.com

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Permalink Reply by Tasse H on August 2, 2009 at 1:25am

Is there a huge tax asset in a the balance sheet of your firm and how certain are you that there is decent cash flow estimate at leat in the next 5 years ?

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