economic profit = EVA

CFA Level II
#1

right? back to review. i actually forgot this during a test.

#2

http://en.wikipedia.org/wiki/Economic_value_added yes economic profit = nopat - wacc( in dollars)

#3

Correct. But remember it is not the same as economic income which is cash flow - economic depreciation. I love this stuff.

#4

thanks goes to eleven. this was my “add no value, frustrated i missed it post”, but i appreciate the answer. i was all over eva, but they asked for economic profit and i froze. i think there will be a lot of corp finance stuff on the exam. of all the sections, the cfa text for cf is loaded, i mean loaded with vignettes! good news for you since you love it…

#5

EI is also cash flow plus change in MV… which I find more intuitive.