EVA and economic profit

CFA Level II Equities
#1

Are these the same thing? Seems like both are NOPAT - $WACC

#2

Yes

#3

yes

#4

As the name says Economic Value added in current year. Profict over your equity change,

two ways to calculate:

NOPAT - $WACC

Other

NI-$required return on equity

#5

no, i think thats not right…

start with operating income and deduct taxes, Net income is the wrong place to begin.

for the taxes remember to adjust for defered taxes, or use the given tax rate.

#6

Conceptually both formulas are same. We should remeber only this one NOPAT - $WACC for level 2 purpose.

#7

NI-Cost of Equity is Residual Income. I don’t think thats exactly the same thing as EVA.

#8

I didn’t mean to confuse anyone.

I clearly mentioned “CONCEPTUALLY” ,

Cross-Reference to Scheweser Study Session 12, page: 234- Book 3

“Professor’s Note: Conceptually, however, they are both measuring economic income.”