How to Calculate EVA




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Malygin Vasily
Student (University), Russian Federation

How to Calculate EVA

Another way to describe how to calculate EVA:
Economic Value Added = NOPAT - Capital Charges
or
Economic Value Added = NOPAT - ( Invested Capital * WACC )
or
Economic Value Added = Invested Capital * ( ROIC - WACC )
 
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1
Rahul Patil
Student (MBA), India
 

Calculating EVA Once Equity is Raised

We calculate EVA as NOPAT(%) - WACC. But once equity is raised cost of equity is out of picture. Is EVA still a good measure?
Another question is that we get EVA after deducting interest. So essentially we are removing the debt cost. And we are subtracting debt cost again in NOPAT - WACC. So shouldn't we be using EBIT - WACC?

   

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