Which of the Following Statements Is CORRECT

question 39

Multiple Choice

Which of the following statements is CORRECT?

• A) MVA stands for market value added, and it is defined as follows: MVA = (Shares outstanding)(Stock price) + Book value of common equity.
• B) The primary difference between EVA and accounting net income is that when net income is calculated, a deduction is made to account for the cost of common equity, whereas EVA represents net income before deducting the cost of the equity capital the firm uses.
• C) MVA gives us an idea about how much value a firm's management has added during the last year.
• D) EVA gives us an idea about how much value a firm's management has added over the firm's life.
• E) EVA stands for economic value added, and it is defined as follows: EVA = NOPAT - (Investor-supplied oper. capital)(AT cost of capital %)

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Definitions:

Oxidation State

A numerical value that signifies the total electrons an atom gains or sheds to establish a chemical bond with a different atom.

Reduction

A chemical reaction in which a molecule gains electrons, often accompanied by a decrease in oxidation state.

Chemical Equation

A symbolic representation of a chemical reaction, with reactants on the left, products on the right, and an arrow indicating the direction of the reaction.

Iron

A strong, hard magnetic silvery-grey metal, very abundant in the earth's crust and the core element of hemoglobin in blood.