RYKER: 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 Extensive'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?

JIA: Well, I would say that because the market value of Extensive'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 negative assessment will result i

market price and MVA.

RYKER: Nicely done! Does this make your reading of Extensive's annual report easier?