Definition for : Economic value added, EVA, EVA Model

The concept of economic Value added is used to measure Value creation over the period in the absolute amount. It is obtained by multiplying the Capital employed at the beginning of the period by the difference between ROCE and WACC. Economic Value added is related to Net present value, because NPV is the sum of the economic values added discounted (see Discounting) at the weighed average Cost of capital. Economic Value added is one of the Economic indicators of value creation. Also called Economic profit

(See Chapter 28 investment criteria of the Vernimmen)

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