Which of the following decisions by management could increase a firm's Market Value Added (MVA)?
A)Improve the rate of return on the existing capital base.
B)Invest more capital in attractive projects with returns that exceed the cost of capital.
C)Stop investing in projects that have returns less than the appropriate cost of capital.
D)All of the above.

Question

Quizplus · Accepted Answer

All of the above choices can increase a firm's Market Value Added (MVA). Improving the rate of return on the existing capital base can increase MVA by increasing the company's profitability. Investing more capital in attractive projects with returns that exceed the cost of capital can increase MVA by increasing the company's future cash flows. Stopping investments in projects that have returns less than the appropriate cost of capital can help prevent wasted capital, leading to improved MVA.

Which of the Following Decisions by Management Could Increase a Firm's