In Practice Adjusted Present Value APV

In chapter 8, we presented the adjusted present value approach to estimate the optimal debt ratio for a firm. In that approach, we begin with the value of the firm without debt. As we add debt to the firm, we consider the net effect on value by considering both the benefits and the costs of borrowing. To do this, we assume that the primary benefit of borrowing is a tax benefit and that the most significant cost of borrowing is the added risk of bankruptcy.

The first step in this approach is the estimation of the value of the unlevered firm. This can be accomplished by valuing the firm as if it had no debt, i.e., by discounting the expected free cash flow to the firm at the unlevered cost of equity. In the special case where cash flows grow at a constant rate in perpetuity, the value of the firm is easily computed.

Debt Free Network Marketing

Debt Free Network Marketing

You and I are aware that cash flow is king in network marketing. Just like any other business, if you don’t have cash in hand, your entire business will come to a grinding HALT! Make no mistake about this because in network marketing, if you don’t have the right mindset and you don’t keep a watchful eye on your cash flow… you will become like the rest of the network marketing failures who run into debt!

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