The Adjusted Present Value: An Alternative Approach to the Effect of Debt on Business Value

Business Valuation UpdateVol. 12 No. 12
December 2006


The market value of a business’ assets is equal to the value of its two funding sources, debt and equity. In their seminal work, Modigliani and Miller’s1 Proposition 1 asserts that in a perfect market and ignoring income taxes, the relative amount of deb ...