Question #59
Reading: Reading 23 Residual Income Valuation
PDF File: Reading 23 Residual Income Valuation.pdf
Page: 29
Status: Unattempted
Correct Answer: B
Question
Market value added is calculated as:
Answer Choices:
A. net operating profit after taxes minus a charge for total capital
B. market value of the company minus a charge for equity capital
Explanation
Market value added is the market value of the company minus total capital. It is used to
measure the effect on value of management's decisions since the firm's inception.