7. The relationship between the book value of shareholders' equity and the firm's Market Aa Aa Value Added (MVA) and Economic Value Added (EVA) Yesterday, Westem Gas & Electric Co. released its 2015 annual report on the company's website. While reading the report for his boss, Asher came across several terms about which he was unsure. He leaned around the wall of his cubicle and asked his colleague, Tessa, for help. Asher Tessa, do you have a second to help me with my reading of Westem G&E's annual report? I've come across several unfamiliar terms, and I want to make sure that I'm interpreting the data and management's comments correctly. For example, one of the footnotes to the financial statements uses "the book value of Westem G&E's shares," and then in another place, it uses "Economic value Added." I've never encountered those terms before. Do you know what they're talking about? Tessa Yes, I do. Let's see if we can make these terms make sense by talking through their meaning and their significance to investors. The term book value has several uses. It can refer to a single asset or the company as a whole. When referring to an individual asset, such as a piece of equipment, book value refers to the asset's adjusted for any accumulated depreciation or amortization expense. The value, or difference between the machine's historical cost and its accumulated depreciation expense, is called its book value. In contrast, when the term refers to the entire company, it means the total value of the company's as reported in the firm's