Valuation with Taxes$-$Value of Assets

Another valuation approach would be to consider the firm as a collection of assets and to value each of these assets separately. The sum of these assets would equal enterprise value. For our simple firm, there are just two assets. The first is the operating capability of the firm $($operating assets$).$ The second is the tax shield provided by debt financing.

No Debt

$\backslash$table$[[104,000],[31,200],[72,800],[0],[0],[72,800]]$

Beta of Operating Cash Flow

Discount Rate

Value of Operations

Interest Payment

Annual Taxes Shield

Discount Rate

Value of Tax Shield

Enterprise Value

Debt $=$$$380,000$

$\backslash$table$[[104,000],[31,200],[72,800],[0],[0],[72,800]]$

EBIT Tax NOPAT Change in Net PPE Change in NWC Free Cash Flow Beta of Operating Ca Discount Rate Value of Operations

Annual Taxes Shield

Discount Rate

Value of Tax Shield

Enterprise Value