Business Valuation
The capital budgeting decision techniques that we've discussed all have strengths and weaknesses, but they do comprise the most popular rules for valuing projects. Valuing entire businesses, on the other hand, requires that some adjustments be made to various pieces of these methodologies. For example, one alternative to NPV used quite frequently for valuing firms is called Adjusted Present Value (APV).
To explore these alternative decision rules, do a web search for APV and answer the following questions:
- What is APV, and how does it differ from NPV?
- What other business valuation models seem to be popular?