Adjusted present value is the sum of net Present Value of a project, if financed solely by ownership equity, and the Present Value of any financing benefits (the additional effects of debt). This method is especially useful in case of highly leveraged transactions such as leveraged buyout where the company is loaded with an extreme amount of debt.
Finance Professionals
The formula of Adjusted Present Value (APV) is given by:
APV = Base-case Net Present Value +Net Present Value of each set of cash flows that results from financing.