This task has the CFO asking your team to look at how the market value of BEB is compared to the industry. You need to come up with a justification for the capital investments being made.

Your team discusses this and has determined EVA (Economic Value Added), as well as MVA (Market Value Added) concepts, need to be established for the corporation.

Use the following table as a guide:

Compute the MVA and EVA for all 3.

Concept Check: Market value added focuses on the market price and relation to invested capital while economic value is based on operational profitability compared to invested capital. These measures help us evaluate our organization internally and externally to help identify gaps and opportunities.

Helpful Hint: Ratios, by themselves, tell us very little; it is only when they are placed in the context of the market, industry, or competition that they truly can be powerful.

Shares Outstanding Market Capitalization Debt & Equity 2021 Stock Price WACC EBIT Net Earnings Industry Average Competitor 1 25,000,000 $ 20,000,000 $ 15,000,000 $ 27.75 $ 36.20 $ 29.15 $ $ $ $ 675,000,000 695,455,000 321,500,000 13% 15% 12* $ $ $ 17,975,000 $ 15,000,000 18,255,000 $ 15,000,000 10,742,000 $ 7,045,000 BEB