Economic value added may be computed as:
A)the change in capital/net income.
B)net income + interest expense - the capital charge.
C)the change in capital × (net income + interest expense).
D)net income/the change in capital.

Question

Quizplus · Accepted Answer

Economic value added (EVA) measures the amount of value a company creates in excess of the return expected for its investors, based on the amount of capital invested. EVA is calculated as net operating profit after taxes (NOPAT) minus a charge for the opportunity cost of all capital invested in the business. This charge is commonly calculated by multiplying the cost of capital by the amount of capital invested, which is known as the capital charge. Therefore, EVA is net income plus interest expense, minus the capital charge.

Economic Value Added May Be Computed As