Economic value added (EVA) is a concept that is closely related to residual income. EVA is computed by:
A) subtracting the adjusted total cost of capital from the adjusted after-tax income.
B) subtracting adjusted after-tax income from total divisional investment.
C) dividing adjusted after-tax income by adjusted divisional investment.
D) dividing adjusted after-tax income by adjusted total cost of capital.

Question

Quizplus · Accepted Answer

EVA is calculated by subtracting the adjusted total cost of capital from the adjusted after-tax income, reflecting the true economic profit of a company.

Economic Value Added (EVA) Is a Concept That Is Closely