When Calculating the Lost Tax Shield Concerning the Terminal Disposition

question 68

Multiple Choice

When calculating the lost tax shield concerning the terminal disposition of an asset four years from now,

• A) the amount calculated by the Tax Shield formula must also be discounted for the four years by the relevant discount factor.
• B) the discount is already included in the formula.
• C) we discount the Lost Tax Shield amount by the tax rate.
• D) we discount the Lost Tax Shield amount by (1 - tax rate).
• E) we discount the Lost Tax Shield amount by (1 + tax rate).

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