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De la solution d'un problème concret (projet d'investissement soumis à une fiscalité spécifique) à une avancée théorique (unicité des méthodes de calcul de Valeurs actuelles)


  • Denis Babusiaux
  • Axel Pierru


The starting point of this article deals with an applied problem of capital budgeting that a firm whose projects are subject to various tax rates (as is often the case in the oil industry) may encounter: how to value a project partly financed by borrowing and subject to a different tax rate from the one used to determine the discount rate of the firm? Surprisingly enough, answering this question led us to develop a unique formulation of the different conventional investment decision methods (standard WACC, Arditti-Levy, Equity Residual, Myers’ APV). Moreover, we generalize the Modigliani-Miller relationship to the case of a project of any duration. Classification JEL : G30, G31, G32

Suggested Citation

  • Denis Babusiaux & Axel Pierru, 2001. "De la solution d'un problème concret (projet d'investissement soumis à une fiscalité spécifique) à une avancée théorique (unicité des méthodes de calcul de Valeurs actuelles)," Revue économique, Presses de Sciences-Po, vol. 52(3), pages 717-727.
  • Handle: RePEc:cai:recosp:reco_523_0717

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    References listed on IDEAS

    1. Holly, Sean & Pesaran, M. Hashem & Yamagata, Takashi, 2010. "A spatio-temporal model of house prices in the USA," Journal of Econometrics, Elsevier, vol. 158(1), pages 160-173, September.
    2. Charles Himmelberg & Christopher Mayer & Todd Sinai, 2005. "Assessing High House Prices: Bubbles, Fundamentals and Misperceptions," Journal of Economic Perspectives, American Economic Association, vol. 19(4), pages 67-92, Fall.
    3. McMillen, Daniel P. & Jarmin, Ronald & Thorsnes, Paul, 1992. "Selection bias and land development in the monocentric city model," Journal of Urban Economics, Elsevier, vol. 31(3), pages 273-284, May.
    4. Case, Karl E. & Mayer, Christopher J., 1996. "Housing price dynamics within a metropolitan area," Regional Science and Urban Economics, Elsevier, vol. 26(3-4), pages 387-407, June.
    5. Colwell, Peter F. & Munneke, Henry J., 1997. "The Structure of Urban Land Prices," Journal of Urban Economics, Elsevier, vol. 41(3), pages 321-336, May.
    6. Lee, Lung-fei & Maddala, G S & Trost, R P, 1980. "Asymptotic Covariance Matrices of Two-Stage Probit and Two-Stage Tobit Methods for Simultaneous Equations Models with Selectivity," Econometrica, Econometric Society, vol. 48(2), pages 491-503, March.
    7. Hans R. Isakson & Mark D. Ecker, 2001. "An Analysis of the Influence of Location in the Market for Undeveloped Urban Fringe Land," Land Economics, University of Wisconsin Press, vol. 77(1), pages 30-41.
    8. McMillen, Daniel P., 2003. "The return of centralization to Chicago: using repeat sales to identify changes in house price distance gradients," Regional Science and Urban Economics, Elsevier, vol. 33(3), pages 287-304, May.
    9. Edward L. Glaeser & Joseph Gyourko & Raven E. Saks, 2005. "Why Have Housing Prices Gone Up?," American Economic Review, American Economic Association, vol. 95(2), pages 329-333, May.
    10. Davis, Morris A. & Palumbo, Michael G., 2008. "The price of residential land in large US cities," Journal of Urban Economics, Elsevier, vol. 63(1), pages 352-384, January.
    11. McMillen, Daniel P. & McDonald, John F., 1991. "A simultaneous equations model of zoning and land values," Regional Science and Urban Economics, Elsevier, vol. 21(1), pages 55-72, May.
    12. Joseph Gyourko & Christopher Mayer & Todd Sinai, 2013. "Superstar Cities," American Economic Journal: Economic Policy, American Economic Association, vol. 5(4), pages 167-199, November.
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    Cited by:

    1. Axel Pierru & Denis Babusiaux, 2008. "Valuation of investment projects by an international oil company: a new proof of a straightforward, rigorous method," OPEC Energy Review, Organization of the Petroleum Exporting Countries, vol. 32(3), pages 197-214, September.

    More about this item

    JEL classification:

    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • G31 - Financial Economics - - Corporate Finance and Governance - - - Capital Budgeting; Fixed Investment and Inventory Studies
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill


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