MVA in Corporate Finance and Equity

CFA Level II
#1

I have noticed that MVA has been used differently in Corporate Finance and Equity which is quite confusing.

MVA in Corporate Finance Economic Profit/ 1+WACC

where Economic profit = NOPAT - $WACC

In Equity: Residual Income Reading.

EVA is NOPAT - $WACC (what has been called MVA in Corporate Finance)

and MVA = Market value of capital - Invested capital

These are quite confusing and I am worried, despite knowing the difference, not choosing the right MVA in the exam. Am I missing something? Any thoughts?

#2

From what I understand, you should know on the exam if you’re doing a corp finance item set or an equity item set. That should clue you in on which method to use. There shouldn’t be any item sets that span multiple topics (e.g., equity and corp finance); however, a corp finance items set can span multiple substopics w/in corp finance.

#3

oh really? I didn’t know that. That’s actually very useful!

Thanks a lot