The APV method to value a project should be used:
A) When the project's level of debt is known over the life of the project
B) When the project's target debt to value ratio is constant over the life of the project
C) When the project's debt financing is unknown over the life of the project
D) None of the above

Question

Quizplus · Accepted Answer

The Adjusted Present Value (APV) method is best used when the project's level of debt is known over the life of the project, as it allows for the separate valuation of the project's base value and the value of financing effects.

The APV Method to Value a Project Should Be Used