Accounting & the 3 Statements
In a DCF, should you use book taxes or cash taxes, and how do deferred taxes enter unlevered free cash flow?
Model answer
A DCF should ultimately reflect CASH taxes, since you're valuing cash flows. The standard mechanic: start from EBIT, apply the marginal/long-run cash tax rate to get tax-effected EBIT (NOPAT), then…
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