Capital Charge

[forumusernew]

Hi all,

For the below -

Residual Income = Net operating profit after tax = (EBIT) *(1-T) – capital charge

Is it fair to say that capital charge will be based on Beginning BV of debt and equity - not current value?

Cheers

[S2000magician]

Yes.

[fr_clem]

@forumusernew

Hi all,

For the below -

Residual Income = Net operating profit after tax = (EBIT) *(1-T) – capital charge

Is it fair to say that capital charge will be based on Beginning BV of debt and equity - not current value?

Cheers

[olajideanuoluwa001]

Yes, both debt and equity book value.