Start networking and exchanging professional insights

Register now or log in to join your professional community.

Follow

What is the concept of Adjusted Present Value? How it differs from NPV?

user-image
Question added by Deleted user
Date Posted: 2014/08/14
Kamran Anjum
by Kamran Anjum , Head of Internal Audit , Rafhan Maize Products Company limited, Faisalabad, Pakistan, Ingredion Incorporated Gmbh

In order to calculate APV we need to evaluate project as if it is all equity financed and then include effects of tax relief on debt and other side financing side effects i.e issuing cost of equity and debt and subsidized loans. The decision rule is to accept the project as long as its total worth is greater than the outlay required. On the other hand in case of NPV project is evaluated at the discount rate that is reflective of total cost of capital i.e. equity and debt in their proportionate ratio.

More Questions Like This