EVA vs EP

[samb007]

is the big difference that EP is to measure equity and EVA is for the firm?

 

[ScottyAK]

EP is for a single period. EVA is the discounted sum of all EPs for a project

 

[SWhip]

EVA is the same thing as EP.
They measure Economic profit which is adjusting NOPAT (basically EBIT * (1-T)) for a charge to total capital.
The total capital charge is total capital * WACC. See how this includes cost for both equity and debt holders. Hence after subtracting out the total capital charge the reamining income is considered to be the economic profit or economic value added by the firm for the period.

 

[SWhip]

@ScottyAK
MVA is the discounted EPs/EVAs. (If you would like to double check, you can see on pg 253 of Schweser Volume 3 that discounted EPs = MVA)
You can also calculate MVA by taking the market value of the firm’s debt & equity minus the invested capital

 

[samb007]

thanks guys.

 

[cfagirl1]

MVA = MV (Total Capital) - BV (NWC+PPE)
or MVA = MV (Total Capital) - BV(LTD + s/h Eq)
Usually MV given

 

[elenayhg]

SO
EVA=EP=NOPAT-$WACC
MVA=sum of PV(EP)
MVA = MV (Total Capital) - BV (NWC+FCINV)
MVA = MV (Total Capital) - BV(LTD + s/h Eq)

 

[vicky_cool400]

Guys
why is invested capital= B value of debt+ b value of equity in Calculating economic value added?
I mean TVIC= Market value of debt+ market value of equity+ cash and marketable securitie sna