Which of the Following Statements Is CORRECT

question 121

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 − (Total invested capital)(AT cost of capital %)