Foreign NPV + APV

Foreign NPV:
Technically this is the same with home NPV only certain things need to be taken into consideration which are as follows:
1) Exchange Rate: You need to convert the foreign currency into the home currency at a certain point of your analysis. This is because the investors or shareholders whom the analysis is been made for are home based and will only understand the impact of the new project based on home currency.
2) Tax:
Where there is tax agreement between the two countries that is the home country and the foreign country where the investment will be undertaken you need to be aware of double taxation. If for example, the home country tax rate is 45% and the foreign country tax rate is 35% than after converting the resultant cash flows you will only charge the balance tax of 10% because at home front.
3) Certain Cash Flows:
Certain Cash flows like Royalty, Management Charges or Subsidy will need to be accounted for as an income as well as expenses. For example, if the foreign project in question will pay Royalty or Management Charges to the Parent Company at the foreign project point of view such cash flows are expenses while at the home or parent company point of view they are income. You will need to deduct such cash flows at the foreign investment appraisal but immediately after converting net cash flows into home currency you will need to translate the Royalty or Management Charges into home currency as an income.

This is what I can said about the Foreign NPV.

Now APV
The issue with Adjusted Present Value is that you need to separate the cash flows from operations from the cash flows from the financing. That is you first of all analyses the cash flows from operations using Ungeared cost of capital while you come back to analyses the financing cash flows using the financing cost or cost of debt as the case may be.

I do hope this little explanation will go a long way to assist you.

Thanks and best regards.

Mohammed T. Elomi