The Adjusted Present Value (APV) is the Net present value (NPV) of a project if financed solely by ownership equity plus the present value (PV) of any financing benefits (the additional effects of debt). Net present value is a form of calculating discounted cash flow. ... Ownership equity, commonly known simply as equity, also risk or liable capital, is a financial term for the difference between a companys assets and liabilities -- that is, the value that accrues to the owners (sole proprietor, partners, or shareholders). ... The present value of a future cash flow is the nominal amount of money to change hands at some future date, discounted to account for the time value of money. ... Debt is that which is owed. ...
By taking into account financing benefits, APV includes tax shields such as those provided by deductible interests.
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