APV Calculation

The investment adjusted for the tax benefits of the used sum of money that is owed with equity as the only source of financing is the adjusted present value. In this calculator, you can find the APV with project cots, risk rate, debt cost, tax rate etc.,

Adjusted Present Value Calculator

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Formula:

PV of Cash Flows = (Cash Flow / (Risk Rate+Asset Beta*(Market Return - Risk Rate))) - Project Cost
Present Value of Tax Shield = Interest Expense * ( Debt Rate / Tax Rate )
Adjusted Present Value (APV) = PV of Cash Flows + Present Value of Tax Shield

Example

If the project cost is Rs. 1,00,000, cash flow is 50000, interest expense is 2.5 Rs, risk rate is 4 %, asset beta is 2, market return is 10 %, cost of debt is 8 % and tax rate is 50 %, then

PV of Cash Flow = ( 50000 / ((4 + 2 * (10 - 4) ) / 100)) - 100000
        = 212500

Present Value of Tax Shield = 2.5 * ( 0.5 / 0.08 )
        = 15.625

Adjusted Present Value = 212500 + 15.625
        = 212515.625

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