Gifts for the movement of capital cash method for assessing risk of cash flows. In this method, the cash flows are calculated to include the benefits of tax shields. In the capital structure, with conventional debt and total equity, equity cash flows are available to equity - net income plus depreciation minus capital expenditures and changes in working capital - plus cash interest paid to bondholders. Shields to tax on the taxable income and thus increase cash flow. Since the tax shields are included in cash flows before tax interest rate that corresponds to the appropriate value of risky assets in capital flows in cash. "Hide
by Richard S. Ruback 13 pages. Publication Date: November 8, 1994. Prod. #: 295069-PDF-ENG
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