Adjusted present value: Difference between revisions
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(APV). | (APV). | ||
A method of project appraisal which seeks to identify and evaluate separately the benefits of using debt for part of the capital requirements of the project. | A method of project appraisal which seeks to identify and evaluate separately the benefits of using debt for part of the capital requirements of the project. | ||
The APV method aims to do this by calculating separately: | |||
#The net present value of the project assuming it were all-equity financed. | |||
#The present value of the tax shield benefits of the proposed debt finance (+/- PV of any other benefits/costs of debt finance). | |||
The APV of the project is the total of these two items. | The APV of the project is the total of these two items. | ||
== See also == | == See also == | ||
* [[Present value]] | * [[Present value]] (PV) | ||
* [[Tax shield]] | * [[Tax shield]] | ||
[[Category:Accounting,_tax_and_regulation]] | |||
[[Category:Corporate_finance]] | |||
Latest revision as of 20:17, 25 June 2022
(APV).
A method of project appraisal which seeks to identify and evaluate separately the benefits of using debt for part of the capital requirements of the project.
The APV method aims to do this by calculating separately:
- The net present value of the project assuming it were all-equity financed.
- The present value of the tax shield benefits of the proposed debt finance (+/- PV of any other benefits/costs of debt finance).
The APV of the project is the total of these two items.
See also
- Present value (PV)
- Tax shield
