Adjusted Present Value Formula
Equation for calculate adjusted present value is,
PVCF = (CF / (RR + AB * (MR - RR))) - PC
PVTS = IE * ( DR / TR )
APV = PVCF + PVTS
CF - Cash Flow
PC - Project Cost
MR - Market Return
RR - Risk Rate
AB - Asset Beta
IE - Interest Expense
DR - Debt Rate
TR - Tax Rate
PVCF - PV of Cash Flows
PVTS - Present Value of Tax Shield
APV - Adjusted Present Value