土豆妮

A common adjustment in calculating economic value added (EVA^?) is to:

A) add back deferred taxes.

B) capitalize and amortize research and development expenses.

C) treat capital leases as operating leases.

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It is common to capitalize and amortize research and development (R&D) expenses and add R&D expenses back to earnings. Deferred taxes are eliminated to pick up only cash taxes. Operating leases are treated as capital leases.

土豆妮

Market value added is calculated as:

A) market value of the company minus total capital.

B) net operating profit after taxes minus a charge for total capital.

C) market value of the company minus a charge for equity capital.

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Market value added is the market value of the company minus total capital. It is used to measure the effect on value of management’s decisions since the firm’s inception.

土豆妮

Economic value added (EVA^?) is calculated as net operating profit after taxes minus:

A) a charge for equity capital.

B) a charge for total capital.

C) capital expenditures.

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EVA = NOPAT – (C% × TC), where NOPAT is a firm’s net operating profit after taxes, C% is the cost of capital, and TC is total capital.

土豆妮

A common adjustment in calculating economic value added (EVA^?) is to:

A) capitalize and amortize research and development expenses.

B) add back deferred taxes.

C) treat capital leases as operating leases.

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It is common to capitalize and amortize research and development (R&D) expenses and add R&D expenses back to earnings. Deferred taxes are eliminated to pick up only cash taxes. Operating leases are treated as capital leases.

土豆妮

Market value added is calculated as:

A) market value of the company minus total capital.

B) net operating profit after taxes minus a charge for total capital.

C) market value of the company minus a charge for equity capital.

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Market value added is the market value of the company minus total capital. It is used to measure the effect on value of management’s decisions since the firm’s inception.