In the Compressed Adjusted Present Value Model, the Appropriate Discount

question 18

True/False

In the compressed adjusted present value model, the appropriate discount rate for the tax shield is the WACC.

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Definitions:

Revenue Derived

Income generated from normal business operations or other specific sources.

Tax Rate

The per-unit amount of the tax or the percentage rate at which the economic activity is taxed.

Tax Burden

The aggregate sum of taxes that individuals or businesses remit, correlated to their earnings or profits.

Inelastic

Describes a situation where the demand or supply for a good or service is not significantly altered when the price changes.