10 Value Added Approaches

Abstract

This is a course material from the book Investment Decision Making. For Firm and Project Valuation. The book is originally in Spanish and is untitled as Decisiones de inversión. Para la valoración financiera de proyectos y empresas.

Chapter 10 is devoted to the measurement of added value. We critically study EVA ® and economic profit. We show that when properly used, the value added methods are proper ways top measure the firm value. We present the idea of Investment Recovery and Value Added IRVA. We study the assumptions and limitations of those methods.

Note: Downloadable document is in Spanish.

Keywords: Economic value added, EVA, economic profit

JEL Classification: G31