Which of the Following Statements Is CORRECT

question 23

Multiple Choice

Which of the following statements is CORRECT?

• A) 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.
• B) MVA gives us an idea about how much value a firm's management has added during the last year.
• C) MVA stands for market value added, and it is defined as follows:
• MVA = (Shares outstanding)(Stock price)+ Book value of common equity.
• D) EVA stands for economic value added, and it is defined as follows:
• EVA = EBIT(1 - T)- (Investor-supplied op.capital)´ (A - T cost of capital).
• E) EVA gives us an idea about how much value a firm's management has added over the firm's life.

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Definitions:

Neutralization

A chemical reaction in which an acid and a base react quantitatively, producing water and a salt, effectively nullifying extreme pH levels.

Folic Acid

A B-vitamin that is essential for DNA synthesis and repair, and is crucial during early pregnancy to prevent neural tube defects in the embryo.

Hemoglobin

A protein in red blood cells responsible for carrying oxygen from the lungs to the body's tissues and returning carbon dioxide from the tissues back to the lungs.

Bile

A digestive fluid produced by the liver and stored in the gallbladder, helping in the digestion and absorption of fats.