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Background Note
| HBS Case Collection
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1994
(Revised from original 1993 version)
Note on Adjusted Present Value
by
Timothy A. Luehrman
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Abstract
Describes the "adjusted present value" (APV) approach to discounted cash flow analysis. Much of the note is devoted to a critical comparison of APV and an approach based on the wrighted average cost of capital (WACC). Argues that APV is usually, if not always, simpler, more accurate, and/or more informative than using the WACC. Designed to be distributed in conjunction with a case on valuation and captial budgeting. Assumes students are familiar with the WACC but not with APV.
Keywords: Valuation;
Cost of Capital;
Citation:
Luehrman, Timothy A. "Note on Adjusted Present Value." Harvard Business School Background Note 293-092, October 1994. (Revised from original January 1993 version.)