In the presence of corporate taxes,riskless cash flows should be discounted at the:

Name: In the presence of corporate taxes,riskless cash flows should be discounted at the:
Brand: Quizplus
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Question

Quizplus · Accepted Answer

Riskless cash flows should be discounted at the aftertax riskless rate of interest because corporate taxes reduce the amount of cash flows that are available to equity holders. Therefore, the aftertax cost of debt should be used to discount the cash flows to reflect the impact of taxes.

In the Presence of Corporate Taxes,riskless Cash Flows Should Be