The relationship between the book value of shareholders' equity and the firm's Market Value Added (MVA) and Economic Value Added (EVA) Yesterday, Western Gas & Electric Co. released its 2015 annual report on the company's website. while reading the report for his boss, Ryker came across several terms about which he was unsure. He leaned around the wall of his cubicle and asked his colleague, Jia, for help. Jia, do you have a second to help me with my reading of Western 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 Western 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? 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 __________. That makes sense, So, what makes this value important to investors is that it is _______ value that can change- but only due to a couple of events, including the ________ of Treasury stack, the sale of new common or preferred shares, and the payment of _________. Equally important, it _______ change in response to changes in the market prices of the firm's shares. Right! So, how useful would a firm's book value be for assessing the performance of Western G&E's management? Well, because Western G&E's book value ____________ with changes in the market price of the firm's shares, the firm's book value _____________ reflect management's efforts to maximize the price of the firm's common stock and therefore __________ be used to evaluate management's performance. Now, what about "Economic Value Added"? During the 1990s, the consulting firm Stem, Stewart & Company developed the concept of Economic Value Added, or EVA, to better assess management's performance in maximizing their shareholders' wealth