Volume 8 (2013)
Volume 7 (2012)
Volume 6 (2011)
Volume 5 (2010)
Volume 3 (2008)
Volume 1 (2006)
Most Downloaded Articles
- Approximate Firm Valuation with Operating Leases by Jennergren, L. Peter
- Valuation of Cash Flows with Time-Varying Cessation Risk by Saha, Atanu and Malkiel, Burton G.
- Fundamentals of Functional Business Valuation by Matschke, Manfred Jürgen/ Brösel, Gerrit and Matschke, Xenia
- Computing Lost Profits in Business Interruption Litigation: A General Model by Stephenson, Stanley/ Macpherson, David A. and Prakash-Canjels, Gauri
- Business Valuation Basics for Attorneys by Dukes, William P.
WACC or APV?
Citation Information: Journal of Business Valuation and Economic Loss Analysis. Volume 2, Issue 2, Pages –, ISSN (Online) 1932-9156, DOI: 10.2202/1932-9156.1016, January 2008
- Published Online:
Miller and Modigliani's seminal papers (1958, 1963) gave rise to two alternative methodologies for project and firm valuations: the Weighted Average Cost of Capital (WACC) and Adjusted Present Value (APV). As is often the case of many larger firms in industrialized economies, whenever a target debt ratio is set up for the long term, WACC might be a good approximation. However, APV has certain advantages making it more convenient for smaller companies with unstable debt ratios, in countries with complex tax legislation and in emerging markets where high economic uncertainty makes the leveraging decision much more opportunistic.