BUISENESS MANAGEMENT
FINANCIAL MANAGEMENT
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Extra Value Analysis
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Economic Value Added
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Expected Value Analysis
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Engineering Value Analysis
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Detailed explanation-1: -EVA stands for Economic value added. In corporate finance, economic value added (EVA) is an estimate of a firm’s economic profit, or the value created in excess of the required return of the company’s shareholders. EVA is the net profit less the cost of the firm’s capital.
Detailed explanation-2: -Economic value added (EVA), also known as economic profit, aims to calculate the true economic profit of a company. EVA is used to measure the value a company generates from funds invested in it.
Detailed explanation-3: -How is economic value added (EVA) calculated? It is the difference between the market value of the firm and the book value of equity. It is the firm’s net operating profit after tax (NOPAT) less a dollar cost of capital charge.
Detailed explanation-4: -Answer» D. how much wealth a company is creating compared to its cost of capital.
Detailed explanation-5: -An economic value added formula is used to find this metric. The EVA formula is (net profit after tax-(capital invested x WACC)).