Economic value added is residual income with the cost of capital equal to which of the following?
A)the firm's budgeted cost of capital
B)the firm's average cost of capital
C)the firm's standard cost of capital
D)the firm's actual cost of capital

Question

Quizplus · Accepted Answer

EVA is calculated as the difference between net operating profit after taxes (NOPAT) and the cost of capital multiplied by invested capital. The cost of capital is the actual cost of capital, which is the rate at which the firm can borrow money.

Economic Value Added Is Residual Income with the Cost of Capital