Adjusted Present Value - APV

Just see our opus on Present Value. It won The Bucky (Academy Award for Finance Video).

"Adjusted," in this case, takes into account all of the elements of a net present value projection of future cash flows and what they're worth today.

Usually, adjustments to present value calculations include things like taxes, and taxes net of the effects of leverage, or debt, as well as dilution from warrants and other weird curve balls that get thrown into the calculated values of companies in the market place.

Remember that interest paid on debt is directly tax deductible, such that the government is essentially splitting the cost of companies, or at least underriding a meaningful part of it when they use leverage, either in their operations or for acquisitions. So adjusting net present value usually maths the crap out of these calculations, usually with the goal of goosing up the value of the company.

Why the goosing? Because most of these adjusted present value calculations are done by the investment bankers hired to sell the company. Think of them as real estate brokers, plus a hundred SAT points.