RAFAEL: Yes, I do$.$ Let's see if we can make these terms make sense by talking through their meaning and their significance to investors.

The term book value has several uses. It can refer to a single asset or the company as a whole. When referring to an individual asset, such as

a piece of equipment, book value refers to the asse

$,$ adjusted for any accumulated

depreciation or amortization expense. The

value, or difference between these two values, is called the asset's book value.

In contrast, when the term refers to the entire company, it means the total value of the company's

as reported in

the firm's

ASHA: That makes sense. So$,$ what makes this value important to investors is that it is

value that can change$-$but

only due to a couple of events, including the

of Treasury stock, the sale of new common or preferred shares, and the

payment of

Equally important, it

change in response to changes in the market prices of the firm's shares.

RAFAEL: Right! So$,$ how useful would a firm's book value be for assessing the performance of Galaxy's management?

ASHA: Well, because Galaxy's book value

with changes in the market price of the firm's shares, the firm's book value

reflect management's efforts to maximize the shareholder wealth and therefore

be used to evaluate

management's performance.

Now, what about "Market Value Added"?

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

value and the

value of Galaxy's shareholders' equity.