RAFAEL: During the $1990$s$,$ the consulting firm Stern, Stewart & Company developed the concept of Market Value Added, or MVA, to better

assess management's performance in maximizing their shareholders' wealth. To achieve this, a firm's MVA is computed as the

between $($of$)$ the

value and the

value of Western G&E$\text{'}$s shareholders' equity.

OK$,$ now here's a question for you: Compared to the book value, what is the advantage of the MVA as a means of evaluating management's

performance?

ASHA: Well, I would say that because the market value of Western G&E$\text{'}$s shareholders' equity is calculated by multiplying the shares'

by the number of shares

$\_,$ then it will fluctuate depending on how the market perceives management's

performance. A positive assessment will result in

I market price and MVA.