Principles of Managerial Finance (14th Edition) (Pearson Series in Finance)
Principles of Managerial Finance (14th Edition) (Pearson Series in Finance)
14th Edition
ISBN: 9780133507690
Author: Lawrence J. Gitman, Chad J. Zutter
Publisher: PEARSON
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Chapter 10.3, Problem 10.6RQ
Summary Introduction

To discuss:

The similarities and differences between NPV, PI and EVA.

Introduction:

The difference between the present value of cash inflows and the present value of cash outflows over a period of time is known as the Net Present value. NPV is used in capital budgeting as a criterion to analyze the profitability of projects. PI is the Profitability Index which is an index that measures that the costs and benefits of a project as the ratio of present value of future cash flows to the initial investment. EVA is the Economic Value Added which is a measure of the economic profit of the company. EVA is calculated by deducting the cost of capital from the operating profit after adjusting for taxes.

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Chapter 10 Solutions

Principles of Managerial Finance (14th Edition) (Pearson Series in Finance)

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