Net Present Value Analysis

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Introduction
The need for relevant information and analysis of capital budgeting alternatives has inspired the evolution of a series of models to assist firms in making the "best" allocation of resources. Capital budgeting is determining how much “the firm pay to finance its operations using debt and equity sources?” (Coo, 2024, p. 373). It helps the company decide which projects will be profitable and when a return can be expected.
Adjusted Present Value (APV) and Net Present Value (NPV)
Net Present Value (NPV) is a common technique used in capital budgeting decisions. NPV measures how profitable is a proposed project. APV is NPV adjusted for the “interest and tax advantages of leveraging debt if equity is the only source of financing” (Adjusted Present Value - APV Definition, n.d.). There is a relationship between APV and NPV as it is necessary to first …show more content…
(n.d.). Advantages and disadvantages of Profitability Index (PI). Retrieved from http://accountlearning.blogspot.com/2011/07/advantages-and-disadvantages-of_04.html
Adjusted Present Value - APV Definition. (n.d.). Retrieved from http://www.investopedia.com/terms/a/apv.asp#ixzz4P5GVi8rJ

Anthes, G. H. (2003). Internal rate of return. Computerworld, 37(7), 32. Retrieved from http://search.proquest.com.ezproxy1.apus.edu/docview/216102110?accountid=8289
Cooper, W. D., Morgan, R. G., Redman, A., & Smith, M. (2002). Capital budgeting models: Theory vs. practice. Business Forum, 26(1), 15-15+. Retrieved from http://search.proquest.com.ezproxy1.apus.edu/docview/210268465?accountid=8289
Cornett, M. M., Adair, T. A., & Nofsinger, J. (2015). Chapter 12. Finance Applications & Theory (3rd ed.). New York: Mcgraw Hill Education.
Investopedia. (n.d.). Advantages and disadvantages of the NPV and IRR methods. Retrieved from

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