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Calculating EVA
In the field of corporate finance, economic value added is a way to determine the value created, above the required return, for the shareholders of a company.
The basic formula is:
where
, called the return on capital employed (ROCE)
is the firm's return on capital, NOPAT is the Net Operating Profit After Tax, c is the Weighted Average Cost of Capital (WACC) and K is capital employed.
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