Over the years,Janjigian Corporation's shareholders have provided $15,250 of capital,part when they purchased new issues of stock and part when they allowed management to retain some of the firm's earnings.The firm now has 1,000 shares of common share outstanding,and it sells at a price of $42.00 per share.How much value has Janjigian's management added to stockholder wealth over the years,i.e.,what is Janjigian's MVA?

Question

Quizplus · Accepted Answer

Market Value Added (MVA) is calculated as the difference between the current market value of a firm's equity and the capital contributed by shareholders. The current market value of Janjigian Corporation's equity is 1,000 shares * $42.00 per share = $42,000. The shareholders have provided $15,250 of capital. Therefore, MVA = $42,000 - $15,250 = $26,750.

Over the Years,Janjigian Corporation's Shareholders Have Provided $15,250 of Capital,part