# Can u.. Right NOW?

Tell me whats the equation for: Economic Profit Economic Income Stuff like that freak me out! I suddenly remember part of the curriculum that I have no idea about (i.e. vanished from my head!)

b0 + ((b0 * ROE-r) / (r-g)) That’s profit… income is that annoying table they want us to fill out.

Economic profit is basically Residual Income. Net Income - charge for equity capital. Economic income is cash flow - change in market value

mcpass Wrote: ------------------------------------------------------- > b0 + ((b0 * ROE-r) / (r-g)) > > That’s profit… income is that annoying table > they want us to fill out. Isnt the profit just Earnings-Equity Charge?? ^^ Thats the RI valuation model

economic profit - NOPAT - \$WACC (EVA) economic income : after tax cash flows - economic depreciation

budfox is the winner.

Economic income as definined by CFAI text is ATCF - Change in MV which can be quickly calculated by multiplying the MV at the beginning of the period by the required rate of return, Economic Profit is as budfox427 said NOPAT-\$WACC or EVA, also as a side note, EVA is equivalent to NPV.

economic profit is EVA as described by budfox economic income : aftertax cashflow+ change in market value which is also equal to aftertax cashflow-economic depreciation. can someone look at the quick sheet at the top? Should AT CF + change in projects MV or minus???

wonder2008 Wrote: ------------------------------------------------------- > economic profit is EVA as described by budfox > > economic income : aftertax cashflow+ change in > market value > which is also equal to aftertax cashflow-economic > depreciation. > > > can someone look at the quick sheet at the top? > Should AT CF + change in projects MV or minus??? AFter tax cash flow Minus depreciation. Depreciation can be calculated by current PV of all the future cash flow - PV starting from next year of all the future cash flow.

quicksheet is saying plus the change in MV. Did you see the first line?

yes, you are correct in say “plus change in MV”, because the change is usually negative.

ok thanks

It is same thing. ATCF + (ending MV - beginning MV) or E depreciation = beginning MV - ending MV