Question

11. While valuing a levered investment project the approach that would lead to the highest value...

11. While valuing a levered investment project the approach that would lead to the highest value would be:

A. APV

B. Flow to Equity

C. Regardless of the approach selected, the value of a levered project should be the same

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Homework Answers

Answer #1

Adjusted present value is specifically designed for investment of a levered investment because adjusted present value method will account for the interest tax deduction which are available on interest payable on the debt financing so this will account for an additional benefit for the levered projects.

flow to equity is specifically designed for unlevered product because these are meant for no debt financing.

Other statement is completely irrelevant.

Correct answer is option ( A) APV

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