What is Adjusted Present Value (APV) technique? How does it differ from other techniques of financial appraisal of the project? Why it is suitable for international project appraisal?

The adjusted present value is the net present value (NPV) of a project or company if financed solely by equity plus the present value (PV) of any financing benefits, which are the additional effects of debt. By taking into account financing benefits, APV includes tax shields such as those provided by deductible interest.

The Formula for APV Is

egin{aligned} & ext{Adjusted Present Value = Unlevered Firm Value + NE}\ & extbf{where:}\ & ext{NE = Net effect of debt}\ end{aligned}​Adjusted Present Value = Unlevered Firm Value + NEwhere:NE = Net effect of debt​

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