AFMHow to tell when to use APV or NPV

Investment The company is considering an investment Diversification The investment is a diversification from its current activity The company would need to raise additional debt finance for the investment Subsidised loan Because the investment is an area that is of interest to the government, it is willing to offer the company a subsidised loan, which will be less than the market rate Reference to issue cost Remember that your cost of capital to discount the cash flows from the investment phase is the ungeeared cost of equity In other words you need to derive ba which you will need to plug into your capm formula Dont forget to adjust your base case NPV for the effects of the financing method Best of luck in your exam