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EVA and the market value of a company
The
market
value
of equity
of a
profitable
company
XXXX Oy
923 MFIM
92 FIM/share
Book
value
of
Equity
500 MFIM
50 FIM/share
Market value
premium
423 MFIM
(Market
Value
Added)
42 FIM/share
40 MFIM
40 MFIM
40 MFIM
40 MFIM
40 MFIM
/1.0
/1.41
/1.29
/1.18
/1.09
Hypothetical Example: Company XXXX produces positive EVA that stays constant 40 MFIM from here to infinity. Thus the present value of EVA is:
40 MFIM
/1.68
Slide 16 of 21
