Economic value added (EVA) is computed as:
A) net income + long-term debt + interest expense.
B) net income + interest expense - capital charge.
C) net income - interest expense + capital charge.
D) net income - long-term debt + interest expense.

Question

Quizplus · Accepted Answer

Economic value added (EVA) is calculated by subtracting the required rate of return on invested capital (capital charge) from the company's after-tax operating profit. Therefore, Option B, net income plus interest expense minus capital charge, is the correct formula for calculating EVA.

Economic Value Added (EVA) Is Computed As