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I was practicing a question yesterday and came across this question which asked ” why a company may prefer t use APV method instead of NPV method”. I also seared Youtube for a relevant lecture regarding this topic but could not find one.
Can you please suggest a few points, enough to earn 4 marks in the paper.
Thanks for consideration.
Was there not an answer in the same book in which you found the question? You should be using a Revision Kit from one of the ACCA approved publishers – they have complete answers 🙂
APV is a better approach when the gearing changes significantly as a result of doing the project (it stems from M&M’s work). I explain this, with examples, in my free lectures.