How are managements actions incorporated iN EVA and MVA How are EVA and MVA related
belongs to book: FUNDAMENTALS OF FINANCIAL MANAGEMENT|Eugene F.Brigham, Joel F. Houston|12th Edition| Chapter number:3| Question number:8
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MVA, the difference between book and market value, measures management's ability to maximize shareholder value. EVA accounts for the true economic profit of a firm, including the firm's cost of equity capital. When management invests in projects that return excess profit over the cost of debt and equity capital, EVA is positive. A positive EVA increases shareholder value and contributes to keeping MVA positive.
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