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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)

Author

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  • Denis Babusiaux
  • Axel Pierru

Abstract

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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    Cited by:

    1. Axel Pierru & Denis Babusiaux, 2004. "Évaluation de projets d'investissement par une firme multinationale : généralisation du concept de coût moyen pondéré du capital et conséquences sur la valeur de la firme," Working Papers hal-02468351, HAL.
    2. Axel Pierru & Denis Babusiaux, 2009. "Valuation of investment projects by an international oil company: A new proof of a straightforward, rigorous method," Working Papers hal-02469498, HAL.
    3. 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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