Question

What is the adjusted present value (APV)?

Select one:

A. This is the same as the net present value (NPV).

B. This is the NPV of a project if financed solely by equity.

C. This is the NPV of a project if financed solely by equity, plus the present value of financing benefits.

D. This is the NPV of a project if financed solely by debt.

In the theory of utilitarianism, right and wrong is defined by:

Select one:

A. Duty

B. Consequences

C. Virtues

D. Intentions

Answer 1

Answer 1)

Adjusted NPV

The correct answer is option C: This is the NPV of a project if financed solely by equity, plus the present value of financing benefits.

NPV is given by following formula

Now Adjusted NPV is given by:

Adjusted NPV = Unlevered Firm Value + Net effect of debt

Here, he net effect of debt mainly includes the tax benefits (tax shield) for the interest that the company pays on a debt.

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Answer 2)

Utilitarianism is the theory which places the correctness of right or wrong solely on the consequences (outcome) of one's actions. This theory promotes the actions that people do that maximizes he happiness and the well being of an individual. In other way it rejects actions that may lead to unhappiness or ay harm anyone (and not just the action doer).

This heiry is contrary to the theory of egoism wherein actions are done for self interest only which may come at expense of others.

Hence, the correct option is Option B. Consequences.