Economic Value Added (EVA)

question 7

Multiple Choice

Economic value added (EVA) :

• A)uses the same basic formula as return on investment (ROI)
• B)ignores R&D spending
• C)decreases a manager's incentive to maximize firm value
• D)is easy to administer
• E)measures the total return after deducting the cost of all capital employed by the firm

---

Definitions:

Second-Market Pricing

The practice of determining the price of goods and services based on their market value in secondary, often resale, markets.

Gray Market

A situation where products are sold through unauthorized channels, often legally, but without the consent of the original manufacturer.

Manufacturer's Suggested Retail Price

The price that the maker of a product recommends it be sold for in retail stores, often seen as a way to standardize prices and maintain a perceived value.

Authorized Channels

Officially approved and recognized paths or mediums through which products or information are distributed, ensuring legitimacy and compliance with regulations.