On the Weighted Average Cost of Capital with Personal Taxes |
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| Authors: | Colin D. B. Clubb Paul Doran |
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| Affiliation: | 1. Accounting and financial management , University of Esex;2. Accounting and finance , London School of Economics |
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| Abstract: | This paper considers the impact of personal taxation on the Miles and Ezzell (1980) result that the weighted average cost of capital is the appropriate rate for discounting after corporation tax cash flows in an MM (Modigliani and Miller, 1958, 1963) perfect capital market with corporation tax. An analogous result, incorporating a capital gains tax adjustment, is derived for the personal tax case, and its application to the UK tax system is considered. |
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