economic profit and Eva

Hi , EP = NOPAT -$WACC , for the WACC book values or market values?

General rule: Always use Market Values to calculate WACC if they are given.

Priority of use on exam: Target D/E >> MV of D/E >> BV of D/E (I think … please correct me if that’s wrong)

For invested capital, use book value

For wights used in WACC calculation… use target weights, or market weights if target weights are not provided… Book value weights should be the last choice

What page on cfa books? Is reference made to using book value?

What page on cfa books? Is reference made to using book value?

What page on cfa books? Is reference made to using book value?

I use schweser … It’s page 233

Just to clarify, when I said book value i meant for invested capital (the amount you multiply by WACC% to get $WACC) … Not the weights in WACC calculation