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Economic Value Added: Definition, Formula & Examples

Instructions:

Choose an answer and hit 'next'. You will receive your score and answers at the end.

question 1 of 3

Which of the following is NOT considered when calculating weighted average cost of capital?

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1. What is the formula to calculate economic value added?

2. If you have net profit of $100,000, invested capital of $50,000 and WACC of 10%, what is your economic value added?

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About This Quiz & Worksheet

This quiz/worksheet combo will test your knowledge of economic value added and how it impacts a company's profits. It will ensure you are up to speed on how economic value added works.

Quiz & Worksheet Goals

In these assessments, you will realize your understanding of the following:

  • The formula to calculate EVA
  • A definition of opportunity cost
  • Determining true statements about EVA

Skills Practiced

  • Information recall - access the knowledge you've gained regarding how to determine EVA using a specific formula
  • Knowledge application - use your knowledge to answer questions about defining the concept of opportunity cost in economic value added
  • Interpreting information - verify you can read information regarding facts about EVA and interpret it correctly

Additional Learning

To increase your knowledge of this economic principle, review the lesson called Economic Value Added: Definition, Formula & Examples. The lesson will cover the following areas:

  • A definition of EVA
  • An example of economic value added
  • The weighted average cost of capital in a formula for EVA
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