Using APV, the analysis can be tricky in examples of:

Question

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All of the above examples can make the analysis tricky when using APV. Tax subsidy to debt and interest subsidy can alter the after-tax cost of debt, which affects the discount rate used in APV. Flotation costs can affect the cash flows generated by a project, making it harder to calculate the adjusted present value. Financial distress costs can also impact the cash flows and discount rates used in APV analysis. Therefore, all of these factors should be carefully considered when using APV.

Using APV, the Analysis Can Be Tricky in Examples Of