Present Value of Tax Shield (PVTS)

$$\text{PVTS}=I\times t\times \frac{c}{c+r}\times \frac{2+r}{2(1+r)}$$

Where:

• $I$ = Net addition or capital cost
• $c$ = CCA Rate
• $t$ = tax rate
• $r$ = after tax required rate of return
• second half of equation is the Half Rate Rule