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Market Value Added (MVA) is the difference between the current market value of a firm and the capital contributed by investors. If MVA is positive, the firm has added value. If it is negative, the firm has destroyed value. The amount of value added needs to be greater than the firm's investors could have achieved investing in the market portfolio, adjusted for the leverage (beta coefficient) of the firm relative to the market.

Basic formula[edit]

The formula for MVA is:

 MVA = V - K  \,

where:

  • MVA is market value added
  • V is the market value of the firm, including the value of the firm's equity and debt
  • K is the capital invested in the firm

MVA is the present value of a series of EVA values. MVA is economically equivalent to the traditional NPV measure of worth for evaluating an after-tax cash flow profile of a project if the cost of capital is used for discounting.

References[edit]

  • G. Bennett Stewart III, The Quest for Value (HarperCollins, 1991).

Original courtesy of Wikipedia: http://en.wikipedia.org/wiki/Market_value_added — Please support Wikipedia.
This page uses Creative Commons Licensed content from Wikipedia. A portion of the proceeds from advertising on Digplanet goes to supporting Wikipedia.

4 news items

 
Shanghai Daily (subscription)
Fri, 22 Aug 2014 02:45:00 -0700

HONG KONG, Aug. 22 (Xinhua) -- Hong Kong stocks ended up 0.47 percent on Friday, with the benchmark Hang Seng index rising 118. 13 points to end at 25,112.23 points, after trading between 25,025. 94 and 25,132.93. Turnover totaled 63.67 billion HK ...
 
Jakarta Globe
Wed, 20 Aug 2014 08:03:10 -0700

Gudang Garam, the nation's second-biggest cigarette maker by market value, added 0.9 percent to Rp 55,000. The miscellaneous sector — which groups automotive, textile, heavy equipment and footwear makers — rose 0.6 percent. Astra Internasional ...
 
Pensions & Investments
Sun, 17 Aug 2014 21:17:35 -0700

The fund had focused on middle-market value-added infrastructure, including the Montreal, Maine & Atlantic Railroad, a 480-mile railroad between Montreal and the east coast of Maine, according to Fortress' presentation to the Washington State ...
 
Yonhap News
Sun, 03 Aug 2014 18:41:15 -0700

Samsung Electronics, South Korea's largest company by market value, added 75.1 trillion won to become worth 197.8 trillion won, while SK hynix, the world's second-largest chip maker, gained 18.4 trillion won. Naver, the nation's No. 1 portal operator ...
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