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Accounting for Financial Management: EVA/MVA The financial statements reflect historical data, but managers' performance must be evaluated on the basis of -Select- values. To provide this information, financial analysts have developed two measures: Market Value Added (MVA) and Economic Value Added (EVA). Market Value Added represents the difference between the money stockholders have invested in the firm versus the cash they could receive if the firm were sold. The equation for MVA is: MVA = (Shares outstanding Stock price) - Total common equity Shareholder wealth is maximized when this difference is -Select- The -Select- a firm's MVA, the better the job management is doing for its shareholders. Economic Value Added is sometimes called " -Select- ", and it is closely related to MVA. The equation for EVA is: EVA = NOPAT - (Total net operating capital)(WACC) EVA differs from -Select- because EVA has a deduction for the cost of equity. Positive EVA on an annual basis helps ensure that MVA is also positive. -Select- can be determined for divisions as well as for the firm as a whole, so it is useful for establishing reasonable compensation for divisional managers as well as top company officers. Quantitative Problem: Rosnan Industries' 2017 and 2016 balance sheets and income statements are shown below. All of the balance of Cash and Equivalents is an operating asset. Balance Sheets: 2016 $85 200 Cash and equivalents Accounts receivable Inventories Total current assets Net plant and equipment Total assets 2017 $100 275 375 $750 2,000 $2,750 250 $635 1,490 $2,125 75 $210 Accounts payable Accruals Notes payable Total current liabilities Long-term debt Common stock Retained earnings Total liabilities and equity $150 75 150 $375 450 1,225 700 $2,750 290 1,225 400 $2,125 Income Statements: 2017 2016 $1,500 1,000 $500 Sales Operating costs excluding depreciation EBITDA Depreciation and amortization EBIT Interest EBT Taxes (40%) Net income $2,000 1,250 $750 100 $650 62 $588 75 $425 $380 235 $353 $228 $48 Dividends paid Addition to retained earnings $53 $300 $180 Shares outstanding Price WACC 150 $22.73 11.00% 150 $20.23 Using the financial statements above, what is Rosnan's 2017 market value added (MVA)? Round your answer to the nearest dollar. Do not round intermediate calculations. Using the financial statements given earlier, what is Rosnan's 2017 economic value added (EVA)? Round your answer to the nearest cent. Do not round intermediate calculations. $