Economic Value Added Is Calculated by Which of the Following

question 110

Multiple Choice

Economic value added is calculated by which of the following formulas?

• A)EVA = After-tax operating income + (Weighted average cost of capital × Total capital employed)
• B)EVA = After-tax operating income × Weighted average cost of capital
• C)EVA = After-tax operating income - (Weighted average cost of capital × Total capital employed)
• D)EVA = Total capital employed - (Weighted average cost of capital × After-tax operating income)

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Definitions:

Factor of Production

An input used in the production of goods or services, including labor, capital, land, and entrepreneurship.

Absolute Advantage

The capacity of a person, business, or nation to manufacture a product or provide a service more effectively than its rivals utilizing the same quantity of resources.

Gains From Trade

Gains from trade are the benefits obtained by countries or individuals from engaging in international trade, allowing them to consume or produce beyond their domestic capabilities.

Factor Market

A marketplace where factors of production (land, labor, capital, entrepreneurship) are bought and sold, affecting the prices and allocation of these resources.