In order for a firm to realize positive EVA,the:
A)ROCE must be less than the cost of capital.
B)cost of capital must be greater than the ROCE.
C)ROCE must be greater than the cost of capital.
D)the ROCE and cost of capital must be equal.

Question

Quizplus · Accepted Answer

EVA (Economic Value Added) is the difference between the net operating profit after taxes (NOPAT) and the cost of capital (WACC). If the ROCE (Return on Capital Employed) is greater than the WACC (Weighted Average Cost of Capital), the EVA will be positive. Therefore, choice C is the best answer.

In Order for a Firm to Realize Positive EVA,the