All-Equity NPV
All-equity NPV values a project's unlevered operating cash flows as if financed without debt, separating asset economics from financing effects.
Project cash-flow analysis identifies the incremental investment, operating, working-capital, terminal, financing, and risk inputs used in capital budgeting.
Capital-budgeting results depend on which cash flows, investment amounts, and risk adjustments enter the model. Begin with the Initial Investment, then estimate only the Incremental Cash Flow caused by accepting the project. Sunk costs belong outside the decision, while opportunity costs, working capital, side effects, and terminal cash flows may belong inside it.
Risk and financing require consistent treatment. The Certainty Equivalent Method adjusts uncertain expected cash flows before discounting them at a risk-free rate. All-Equity Net Present Value separates the value of the underlying project from financing effects.
Not every investment measure serves project valuation. Controllable Investment is primarily a responsibility-accounting measure used to evaluate an investment-center manager on capital that the manager can influence.
Match cash flows and discount rates: nominal with nominal, real with real, after-tax with after-tax, and firm cash flows with a firm-level required return. Keep operating assumptions, financing effects, and managerial performance measures distinct. A model should reconcile to source evidence and show which assumptions cause the decision to change.
These pages provide general corporate-finance education and do not recommend a project, security, financing structure, or investment decision.
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All-equity NPV values a project's unlevered operating cash flows as if financed without debt, separating asset economics from financing effects.
The certainty equivalent method converts risky expected project cash flows into risk-adjusted equivalents and discounts them at a risk-free rate.
Controllable investment is the capital base an investment-center manager can materially influence under an organization's responsibility-accounting policy.
Additional cash inflows and outflows caused by accepting a project, used in capital budgeting, NPV, IRR, and investment approval.
Upfront cash required to start a project, used as the time-zero input in NPV, IRR, payback, and capital-budgeting analysis.