A relatively new valuation technique that emphasizes the difference between a firm's operating profits and its cost of capital is called:
A)the discounted dividend model.
B)the capital asset pricing model.
C)economic value added model.
D)the market capitalization model.

Question

Quizplus · Accepted Answer

The economic value added (EVA) model emphasizes the difference between a firm's operating profits and its cost of capital. It aims to calculate the residual income generated by a company after considering the cost of debt and equity capital. This approach is used to determine the true economic profit of a company and has gained popularity in recent years. The other options listed are different valuation techniques, but do not specifically focus on operating profits and cost of capital.

A Relatively New Valuation Technique That Emphasizes the Difference Between