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Calculating Economic Value Added EVA | What is EVA | FIN-ED

#fin-ed Calculating Economic Value Added EVA | What is EVA | FIN-ED Hi, in this video, we will discuss what Economic Value Added or EVA is, how you can calculate EVA, and how to interpret EVA values. In general, companies create value if their investments' benefits exceed the cost of raising the necessary capital. EVA is also called economic profit. For 2019, Gourmet Kitchen Products reported $22 million of sales and $19 million of operating costs (including depreciation). The company has $15 million of investor-supplied operating capital. Its weighted average cost of capital is 10% and its federal-plus-state income tax rate was 25%. What was the firm’s Economic Value Added (EVA), that is, how much value did management add to stockholders’ wealth during 2019? Source: Fundamentals of Financial Management (Concise Edition) Brigham and Houston Chapter 3: Problem 3-11 MVA calculation:    • How to calculate market value added |...   Interest expense calculation:    • Calculating Interest Expense in Incom...  

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