Adjusted Present Value (APV) is a financial method used to value a project or company by separating its value into two parts:

Value of the project without debt (all-equity financed)

Plus the value of financing benefits (like tax savings from debt)

Simple Meaning:

APV shows the true value of a project by adding the basic project value and the extra benefits from borrowing.

Formula:

APV = NPV (as if all-equity financed) + Present Value of Financing Benefits

Example:

If a project’s value without debt is ₹10,00,000 and tax savings from debt are worth ₹1,00,000,
APV = ₹11,00,000.

Purpose:

Useful in large or complex financing decisions

Helps analyze the impact of debt separately

In short, Adjusted Present Value calculates project value by clearly separating operating value and financing effects.