Adjusted Present Value (APV) is a business valuation method. APV is the net present value of a project if financed solely by ownership equity plus the present value of all the benefits of financing. It was first studied by Stewart Myers, a professor at the MIT Sloan School of Management and later theorized by Lorenzo Peccati, professor at the Bocconi University, in 1973.

The method is to calculate the NPV of the project as if it is all-equity financed (so called base case). Then the base-case NPV is adjusted for the benefits of financing. Usually, the main benefit is a tax shield resulted from tax deductibility of interest payments. Another benefit can be a subsidized borrowing at sub-market rates. The APV method is especially effective when a leveraged buyout case is considered since the company is loaded with an extreme amount of debt, so the tax shield is substantial.

Technically, an APV valuation model looks pretty much the same as a standard DCF model. However, instead of WACC, cash flows would be discounted at the unlevered cost of equity, and tax shields at either the cost of debt (Myers) or following later academics also with the unlevered cost of equity. . APV and the standard DCF approaches should give the identical result if the capital structure remains stable.

Present value, also known as present discounted value, is the value on a given date of a payment or series of payments made at other times.

If the payments are in the future, they are discounted to reflect the time value of money and other factors such as investment risk. If they are in the past, their value is correspondingly enhanced to reflect that those payments have been (or could have been) earning interest in the intervening time. Present value calculations are widely used in business and economics to provide a means to compare cash flows at different times on a meaningful "like to like" basis.

If offered a choice between 100 today or 100 in one year and there is a positive real interest rate throughout the year ceteris paribus, a rational person will choose 100 today. This is described by economists as time preference. Time preference can be measured by auctioning off a risk free security--like a US Treasury bill. If a 100 note, payable in one year, sells for 80 now, then 80 is the present value of the note that will be worth 100 a year from now. This is because money can be put in a bank account or any other (safe) investment that will return interest in the future.