An alternative to NPV. Cashflows are discounted using the cost of equity (instead of the WACC) and a separate adjustment is made for financing (i.e, the tax savings.... more on: Adjusted present value
The net present value analysis of an asset if financed solely by equity (present value of un-levered cash flows), plus the present value of any financing decisions (levered cash flows). In other words, the various tax shields provided by the deductibility of interest and the benefits of other investment tax credits are calculated separately. This analysis is often used for highly leveraged transactions such as a leverage buy-out.
A valuation method that separately identifies the value of an unlevered project from the value of financing side effects.