Please use this identifier to cite or link to this item: http://hdl.handle.net/1959.14/98570
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- Title
- Pre and post tax discount rates and cash flows - a technical note
- Related
- Journal of applied research in accounting and finance, Vol. 4, No. 1 (2009), p.41-45
- Related
- http://www.mgsm.edu.au/wps/wcm/connect/Internet/Root/research/publications/journals/jaraf/2009jul/
- Publisher
- Macquarie Graduate School of Management
- Date
- 2009
- Author/Creator
- Lonergan, Wayne
- Description
- When discounting pre tax cash flows it is often assumed that discounting pre tax cash flows at pre tax discount rates will give the same answer as if after tax cash flows and after tax discount rates were used. However, this is not the case and material errors can arise, unless both the cash flows and the discount rate are after-tax. Drawing upon a series of analytical examples, common conceptual flaws in discount rate and cashflow stream selection are highlighted. In light of these, it is argued that discounted cashflow analysis should be configured on the basis of after tax cashflows discounted with after tax discount rates.
- Description
- 5 page(s)
- Resource Type
- Journal Of Applied Research In Accounting And Finance Collection
- Resource Type
- journal article
- Organisation
- Macquarie University. Macquarie Graduate School of Management
- Identifier
- http://hdl.handle.net/1959.14/98570
- Identifier
- ISSN:1834-2590
- Identifier
- mq-20101029-100220
- Language
- eng
- Rights
- Publisher version archived with the permission of the publisher Macquarie Graduate School of Management, Macquarie University, NSW, Australia. This archived copy is available for individual, non-commercial use. Permission to use this version for other uses must be obtained from the publisher.
- Full Text
- Reviewed
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