A general formula for the WACC: a reply

Research, Preprint English OPEN
Farber, André; Gillet, Roland; Szafarz, Ariane;
  • Publisher: Centre Emile Bernheim, Bruxelles
  • Subject: Capital; Investment; Capacity | E22 | G30 | G32 | Corporate Finance and Governance: General | value of tax shield. | WACC; value of tax shield. | Economie | WACC | Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure
    • jel: jel:G30 | jel:G32 | jel:E22

Farber, Gillet and Szafarz (2006) propose a general formula for the WACC in which the expected return on the tax shield appears explicitly. The classical Modigliani-Miller and Harris-Pringle WACC formulas for specific debt policies are then derived from the general form... View more
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