题目
单项选择题
One corporate valuation method is the Adjusted Present Value (APV) method. Which statement regarding the APV method is most likely true?
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思路分析
The question asks about the APV method and which statement is most likely true.
Option A: 'The APV method is a general approach for valuing firms that do not have constant debt ratios.' This aligns with the core idea of APV: it valuates the project or firm by separating......Login to view full explanation登录即可查看完整答案
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类似问题
The Mars project will generate a free cash flow of $110 per year forever starting in Year 1 and its unlevered cost of capital is 20%. The project costs $400 and it will be financed entirely with a loan with the following fixed schedule: borrow $400 today, pay annual interest on the principal at a 10% rate in Year 1 and Year 2, and repay the principal at the end of Year 2. The tax rate is 40%. The project’s NPV estimated using the APV method (with one decimal) is:
Continuing on from Question 3: Abacus Industries is considering a 3-year project that will cost $200 today followed by free cash flows to the firm of $100 in year 1, $80 in year 2, and $160 in year 3. The tax rate is 35%. Assuming instead of 100% equity, Abacus funds the project with $70 of debt at an interest rate of 7%. For the three years of the project ABC will pay only interest. The loan of $70 will be repaid at the end of year 3. The balance of the cost of the project will be financed with equity. What is the levered NPV of this project using the APV method:
Continuing on from Question 1: ABC is still considering investing in the project with the initial cost of $560,000 and that will earn unlevered free cash flows (FCFF) of $96,000 per year in perpetuity. The unlevered cost of capital is still 20% and the tax rate is 40%. Assume instead of funding with 100% equity, ABC funds the project with $280,000 in perpetual debt (wtih an interest rate of 10%) and the remainder of funding will be with equity. What is the NPV of the levered project using the APV method?
One valuation method is the Adjusted Present Value (APV) method. Which statement regarding the APV method is most likely wrong?
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