Im struggling with the concept of economic profit, ecnomic income, economic depreciation, eva etc
I have re-read my notes but i think i need a video lecture on this topic. Anyone willing to share with me any access to a lecture on this topic, please pm me.
capital budgeting is so fun and easy… definetly a free-be on the exam. If you know how to use Cash Flow on your calculator like a wizard you should be fine. Hardest section of cap budgeting is the abandonment option stuff other than that its a cake walk man
What im stuggling with is the difference between ecomomic profit and economic income …also in Schweser mock 2014…
EP = Nopat - (Wacc * Total Capital)
Nopat = EBIT (1-t) and total capital is beginning Assets
Economic Income= CF + Change in Market Value
Change in Market value is just (END MV) - (BEG MV)
END MV you subtract a years cash flow so if it was a 5 year life it turns into 4 year life…
BEG MV is the npv at 5 years