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How to Calculate EVA
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Malygin Vasily
20
Malygin Vasily
Student (University), Russian Federation

How to Calculate EVA

Another way to describe how to calculate EVA:
Economic Value Added = NOPAT - Capital Charges
or
Economic Value Added = NOPAT - ( Invested Capital * WACC )
or
Economic Value Added = Invested Capital * ( ROIC - WACC )

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  Rahul Patil
1
Rahul Patil
Student (MBA), India
 

Calculating EVA Once Equity is Raised

We calculate EVA as NOPAT(%) - WACC. But once equity is raised cost of equity is out of picture. Is EVA still a good measure?
Another question is that we get EVA after deducting interest. So essentially we are removing the debt cost. And we are subtracting debt cost again in NOPAT - WACC. So shouldn't we be using EBIT - WACC?

 

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More on Performance Measurement
Summary Discussion Topics
topic EVA growth is what matters
👀How to Calculate EVA
topic EVA for Corporate Incentives
topic Calculating EVA for a Proprietary Company
topic EVA & Amortization of R&D
topic What is the Impact of Debt on EVA?
topic Revised Economic Value Added (REVA)
🔥 What is EVA Momentum?
topic Alternative Methods for Economic Value Added (EVA)
topic EVA Calculation across a Whole Value Chain
topic EVA applied to consulting services
Special Interest Group


More on Performance Measurement
Summary Discussion Topics
topic EVA growth is what matters
👀How to Calculate EVA
topic EVA for Corporate Incentives
topic Calculating EVA for a Proprietary Company
topic EVA & Amortization of R&D
topic What is the Impact of Debt on EVA?
topic Revised Economic Value Added (REVA)
🔥 What is EVA Momentum?
topic Alternative Methods for Economic Value Added (EVA)
topic EVA Calculation across a Whole Value Chain
topic EVA applied to consulting services
Special Interest Group
Knowledge Center

Performance Measurement


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