Which of the following is true of the adjusted present value method of valuation?
A) Calculates the present value of tax benefits separately
B) Calculates the present value of the firm's cash flow without debt
C) Adds A and B together
D) A, B, and C
E) A and B only

Question

Quizplus · Accepted Answer

The adjusted present value (APV) method involves calculating the present value of the firm's cash flows without debt (unlevered firm) and separately calculating the present value of tax benefits from debt. These values are then added together to determine the total value of the firm.

Which of the Following Is True of the Adjusted Present