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It has been said that APV is a better technique than WACC/NPV to use to evaluate leveraged buyouts and management buyouts. Why ?

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Question added by Frank Mwansa , ACCOUNTING LECTURER , FREELANCER
Date Posted: 2016/02/04
Ansar Iqbal
by Ansar Iqbal , Lecturer , Apex college sambrial

APV = NPV of project assuming it is all equity financed + NPV of financing effects

Net Present Value (NPV) and Weighted average cost of capital (WACC) these two techniques not define separately much about Leveraged Buyout and Management buyout because LB( how many investment made by financing outsider investors in form of Loan) and MB (how many investment made by equities) so APV describe both PV e.g LB and MB  separated, because NPV overall view of company PV and WACC show just shows cost of capital not PV.

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