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Contrast the NPV vs the APV method

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Question - In every 1st semester finance class the instructor talks about the Net Present Value method of discounting free cash flows.  In this class we introduce a different method of analyzing a projects cash flow projections. The method is called the Adjusted Present Value (APV) method.  Please answer the following questions:

1) Contrast the NPV vs. the APV method.

2) If the NPV method uses the WACC for discounting, what does the APV method use(s)?

3) Should the answers of both the NPV and APV converge to the same answer?

Reference no: EM133026667

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