you really need to understand Economic Value Added (EVA). So what is EVA?

As the statement above implies, EVA has to do with the valuation of a corporation - specifically, the value of the corporation to equity holders or lenders. Investors have always judged the value of their investments, at least in part, on the basis of residual income. EVA adds the insight that capital costs money (i.e., a corporation has to pay a required rate of return to investors or lenders in order to use capital). EVA, therefore, is the calculation fo a corporation's residual income, adjusted for the cost of capital.

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