Question 5 (18 points)

In the context of value based management most of the companies have adopted an EVA concept. Please name and shortly explain each element of generic formula for EVA calculation ( key words only, 6 points). How would you interpret an investment project with the following information given? (6 points)

Project Cashmax Project Calculation (in Euro Million)
Year	1	2	3	4	5	6	7	8	9
EVA undiscounted	-6	-3	0	1	2	2	3	3	5
EVA undiscounted (DF 100%)	-5,45	-2,48	0,00	0,68	1,24	1,13	1,54	1,40	2,12
Sum of EVA disc	0,18

Instead of EVA, some companies took on the more complex CVA concept. Explain two major point of criticism of the EVA concept which the CVA concept does not have. (6 points)