Adjusted present value


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Adjusted present value (APV)

The net present value analysis of an asset if financed solely by equity (present value of unlevered cash flows), plus the present value of any financing decisions (levered cash flows). In other words, the various tax shields provided by the deductibility of interest and the benefits of other investment tax credits are calculated separately. This analysis is often used for highly leveraged transactions such as a leveraged buyout.

Adjusted Present Value

The net present value of any project financed exclusively by equity and the present value of debt. Using the adjusted present value can carry some tax benefits.
References in periodicals archive ?
The results indicate that the adjusted present value of the project increases as project risk rises.
The average adjusted present value of the riskless project in Panel B is $751.
The figures are computed by dividing the change in the present value of contributions to the pension fund by the adjusted present value of the project.
The Adjusted Present Value method has been gaining importance in the recent past, not only among theorists, but also for practitioners.
Case 1 refers to a valuation of the step-up induced depreciation benefit in the context of an Adjusted Present Value approach.
Property Investment Analysis Using Adjusted Present Values.
Implicitly, the adjusted present value approach is built on the presumption that it is easier and more precise to compute the valuation impact of debt in absolute terms rather than in proportional terms.
This step of the adjusted present value approach poses the most significant estimation problem, since neither the probability of bankruptcy nor the bankruptcy cost can be estimated directly.
Locke, "Property Investment Analysis Using Adjusted Present Values," The Appraisal Journal (July 1990): 373-378.
Choosing Between Capital Cash Flows and Adjusted Present Value Methods
Myers' [22] adjusted present value (APV) method calls for first computing a base-case value under the assumption of 100% equity financing, and then separately adding the present values of any costs and benefits from the actual financing package.
To implement the adjusted present value method, the debt schedule in Exhibit 5 can be used to calculate the schedule of effective debt tax shields, [r.