Articles for tag: Cost of Capital

What is Economic Value Added (EVA)?

There are numerous ways to discuss a company’s value, including share price, debt-to-equity and other ratios, fair market value, and so forth. But if you want to sound really smart around business professionals, you really need to understand Economic Value Added (EVA). So what is EVA? As the statement above implies, EVA has to do ...

How Net Present Value (NPV) is Calculated

In capital budgeting, the net present value is one of the most common decision methods to decide if a project should be undertaken or not. Net Present Value (NPV) is defined as “the difference between the present value of cash inflows and the present value of cash outflows.” Because payback and discounted payback decision methods ...

Two Approaches to Performance Management

Many companies are using a Balanced Scorecard (BSC) and Economic Value Added (EVA) as a way to measure performance. I will provide a summary of both to determine if BSC or EVA is the better way for a company to determine performance. Organizations need to be able to measure their financial and non-financial performance. The ...

Cost of Capital

  Memorandum TO: Managers and Finance Personnel FROM: VP of Finance DATE: September 12, 2011 SUBJECT: Cost of Capital Introduction Today we will be explaining a company’s cost of capital and how the cost of capital for a company is calculated. The marginal cost of capital will also be explained, as well as how the ...