Question
The concept of Economics Value Added (EVA) is the same as the concept of Residual Income (RI). we have the following two equations to calculate
Market Value of The Firm = Book Value of Equity + PV(All futures RIs) + MV(Debt)
Market Value of The Firm = Total Capital + PV(All futures EVAs) Based on the above two equations, clearly explain whether we can combine the above two questions together to conclude the following relationship:
Total Capital = Book Value of Equity + MV(Debt)
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Financial Accounting For Managers
Authors: Sanjay Dhamija
3rd Edition
978-9352868339
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