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mamuka12

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tT
发表于 2011-7-13 14:49 | 只看该作者

EVA vs RI

problem
Isnt it the same thing?

Thought EVA is another method of calculating RI? Im slightly confused because on a practice test, it revealed different results for the same problem
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luda002

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2#
发表于 2011-7-13 14:49 | 只看该作者
They're similar but EVA is different in that it uses WACC.

EVA = NOPAT - (WACC% x Total Cap) NOPAT = EBIT(1-T)

RI = NI - (cost of equity x BV)

EVA is economic value added to both shareholders and debt holders. RI is economic value of equity only.

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benbenxiong

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3#
发表于 2011-7-13 14:49 | 只看该作者
thank you for ur explanation -- i understand that but my point was it should still reveal the same result.. no?

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kickthatcfa

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4#
发表于 2011-7-13 14:49 | 只看该作者
they would

under the circumstances that:
a. WACC was calculated with the Book Value of Debt and Book Value of Equity
b. Interest rate on Debt used on the Income statement = rd used for WACC

CP

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