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3#
发表于 2011-7-11 19:19
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Cost of Capital is WACC which includes a component of debt and a component of equity, hence r (cost of equity) is a component of WACC
EVA=NOPAT-$WACC
After you have your operating profits from all deductions necessary pre interest expense, in this case (NOPAT) you take out the portion of the cost of providers of capital (both debt and equity) in this case expressed in terms of $WACC, anything left over after paying off your Equity and Debt is considered Value added (EVA)
If you r decrease, it will decrease your $ WACC so you don't need to pay equity holders as much as you did before, hence your residual added value (EVA) after paying off capital providers goes up.
- Guille |
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