Adjusted present value is based on the present-day fair value adjusted to reflect the passage of time.

Question

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Adjusted present value (APV) is a valuation method that separates the value of an investment project into the value of the project without debt (the present value of unlevered cash flows) and the value of the financing side effects (like tax shields). It does not adjust present-day fair value to reflect the passage of time.

Adjusted Present Value Is Based on the Present-Day Fair Value