The Formula to Calculate EVA Is

question 161

Multiple Choice

The formula to calculate EVA is

• A)Net operating profit - invested capital x weighted average cost of capital.
• B)Contribution margin - invested capital x weighted average cost of capital.
• C)Net operating profit - average capital assets x internal rate of return.
• D)Contribution margin - average capital assets x internal rate of return.

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Definitions:

Systematic Factors

External influences that affect all companies in the market to some extent, such as economic, political, and social changes.

Industrial Production

An economic indicator that measures the level of output in the manufacturing, mining, electric, and gas industries.

Long-term Interest Rates

Interest rates on loan agreements or debt instruments, like bonds, which are due in more than one year.

Market Risk Premium

The additional return expected by investors for taking on the risk of investing in the stock market over a risk-free asset.