Economic value added:
A) is a dollar amount rather than a percentage.
B) uses a firm's weighted-average cost of capital.
C) uses total assets in its computation and ignores current liabilities.
D) cannot be negative.
E) is both a dollar amount rather than a percentage and uses a firm's weighted-average cost of capital.

Question

Quizplus · Accepted Answer

Economic Value Added (EVA) is indeed a dollar amount rather than a percentage, which differentiates it from many other performance metrics that are expressed as percentages. It also uses a firm's weighted-average cost of capital (WACC) in its computation to determine the cost of capital. This makes option E correct as it combines both accurate statements.