Byrd Lumber has 2 million shares of common stock outstanding that sell for $17 a share.If the company has $40 million of common equity on its balance sheet,what is the company's Market Value Added (MVA)?
A)−$5,415,000
B)−$5,700,000
C)−$6,000,000
D)−$6,300,000
E)−$6,615,000

Question

Quizplus · Accepted Answer

The Market Value Added (MVA) is calculated as the difference between the market value of the company's equity and the book value of its equity. The market value of equity is 2 million shares * $17 = $34 million. The book value of equity is $40 million. Therefore, MVA = $34 million - $40 million = -$6 million.

Byrd Lumber Has 2 Million Shares of Common Stock Outstanding