The formula to calculate the Tax Amortisation Benefit (TAB) Factor is:
\[ TAB = \frac{T \times r \times (1 - (1 + r)^{-n})}{r} \]
Where:
A Tax Amortisation Benefit (TAB) factor is a financial concept that refers to the present value of the tax shield provided by the amortisation of an intangible asset. It is used in business valuation to account for the tax benefits a company receives from the depreciation of its intangible assets, such as patents, trademarks, or copyrights. The TAB factor can increase the value of a company’s intangible assets, thus increasing the overall value of the company.
For example, if the tax rate (T) is 30%, the discount rate (r) is 5%, and the useful life of the asset (n) is 10 years, the Tax Amortisation Benefit (TAB) Factor can be calculated as follows:
\[ TAB = \frac{0.30 \times 0.05 \times (1 - (1 + 0.05)^{-10})}{0.05} = \frac{0.30 \times 0.05 \times (1 - 0.6139)}{0.05} = \frac{0.30 \times 0.05 \times 0.3861}{0.05} = \frac{0.00579}{0.05} = 0.1158 \]
So, the Tax Amortisation Benefit (TAB) Factor for these values is 0.1158.