Using the change in Water \& Power's EVA as the decision criterion, which type of investment recommendation should you make to your clients? A sell recommendation A hold recommendation A buy recommendation Which of the following statements are correct? Check all that apply. The percentage change in Water \& Power's MVA indicates that its management has increased the firm's value. An increase in the number of common shares outstanding must increase the market value of the firm's equity. Water \& Power's NCF is calculated by adding its annual interest expense to the corresponding year's net income. Other things remaining constant, Water \& Power's EVA will increase when its ROIC exceeds its WACC. For any given year, one way to compute Water \& Power's EVA is as the difference between its NOPAT and the product of its operating capital and its weighted average cost of capital. Water and Power Co. Balance Sheet December 31, Year 2 6. The calculation of a firm's Market Value Added (MVA) and Economic Value Added (EVA) Rafael, your newly appointed boss, has tasked you with evaluating the following financial data for Water and Power Co. to determine how Water \& Power's value has changed over the past year. The investment firm for which you work will make a positive (or "buy") recommendation to its investing clients if Water \& Power's value has increased over the past year, a neutral (or "hold") recommendation if the value has remained constant, or a negative (or "sell") recommendation if the value has decreased. He has recommended that you use several metrics to ascertain how the firm's value has changed, and he has provided you with the following income statement and balance sheet. Water and Power Co. Income Statement January 1 - December 31, Year 2 Company Growth and Performance Metrics Using the change in Water \& Power's EVA as the decision criterion, which type of investment recommendation should you make to your clients? A sell recommendation A hold recommendation A buy recommendation Which of the following statements are correct? Check all that apply. The percentage change in Water \& Power's MVA indicates that its management has increased the firm's value. An increase in the number of common shares outstanding must increase the market value of the firm's equity. Water \& Power's NCF is calculated by adding its annual interest expense to the corresponding year's net income. Other things remaining constant, Water \& Power's EVA will increase when its ROIC exceeds its WACC. For any given year, one way to compute Water \& Power's EVA is as the difference between its NOPAT and the product of its operating capital and its weighted average cost of capital. Water and Power Co. Balance Sheet December 31, Year 2 6. The calculation of a firm's Market Value Added (MVA) and Economic Value Added (EVA) Rafael, your newly appointed boss, has tasked you with evaluating the following financial data for Water and Power Co. to determine how Water \& Power's value has changed over the past year. The investment firm for which you work will make a positive (or "buy") recommendation to its investing clients if Water \& Power's value has increased over the past year, a neutral (or "hold") recommendation if the value has remained constant, or a negative (or "sell") recommendation if the value has decreased. He has recommended that you use several metrics to ascertain how the firm's value has changed, and he has provided you with the following income statement and balance sheet. Water and Power Co. Income Statement January 1 - December 31, Year 2 Company Growth and Performance Metrics