taxrates—theeffectivetaxrateforever,themarginaltaxrate
forever, and an approach that combines the two rates.
APPROACH 1: Effective Tax Rate Forever
WefirstestimatethevalueofConvoyassumingthatthetax
rate remains at 20% forever:
Thisvalueisbasedontheimplicitassumptionthatdeferred
taxeswillneverhavetobepaidbythefirm,andthatitcan
continue to defer rates in perpetuity.
APPROACH 2: Marginal Tax Rate Forever
WenextestimatethevalueofConvoyassumingthatthetax
rate is the marginal tax rate of 40% forever: