Business 1 has a total market value of $500 million and total capital invested of $350 million. Business 2 has a total market value of $850 million and total capital invested of $570 million. Business 3 has a total market value of $700 million and total capital invested of $420 million. Business 4 has a total market value of $680 and total capital invested of $460. Business 5 has a total market value of $500 million and total capital invested of $220. Use MVA and any other calculation necessary to find which business provides the highest wealth creation.

Question

Quizplus · Accepted Answer

Market Value Added (MVA) is calculated as the difference between the total market value and the total capital invested. For each business: Business 1: $500M - $350M = $150M Business 2: $850M - $570M = $280M Business 3: $700M - $420M = $280M Business 4: $680M - $460M = $220M Business 5: $500M - $220M = $280M Among the options, Business 5 has the highest wealth creation relative to its capital invested, with an MVA of $280M, which is the same as Businesses 2 and 3. However, given the lower initial capital investment, Business 5 demonstrates a higher efficiency in wealth creation.

Business 1 Has a Total Market Value of $500 Million