![]() Secondly, possible investor valuation errors from use of a PDMP (passive debt management policy) valuation methodology to value firms pursuing an ADMP are analysed in the context of an MM perfect capital market with corporation tax. These derivations do not require the assumption of level perpetuity expected cash flows and therefore indicate a broader basis for the ADMP beta de-gearing formulae than previously demonstrated. ![]() First, alternative derivations of the ADMP beta de-gearing formulae for an MM perfect capital market with corporation tax and for a world with corporation and personal taxes are presented. This paper extends previous work by Appleyard and Strong (1989) concerned with the implications of an active debt management policy (ADMP) for de-gearing a geared firm's equity beta.
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