EVA used for
a. Determine the opportunity costs associated with the project
b. Determine a non–time-dependent measure of profit or return
c. Assess the net operating profit after taxes
d. Evaluate the return on capital percent versus the cost of capital percent
Answer: d. Evaluate the return on capital percent versus the cost of capital percent
The purpose of economic value added (EVA)
EVA quantifies the value a company provides to its investors and seeks to determine if a company is creating or destroying value to its shareholders. It is calculated by subtracting the expected return, (represented by the capital charge), from the actual return that a company generates, (represented by net operating profit after taxes). [Initiating]