The relationship between Economic Value Added (EVA) and the Net Present Value (NPV) is considered as _________?
Correct answer: B. direct relationship
- A. valued relationship
- B. direct relationship
- C. economic relationship
- D. inverse relationship
Explanation
EVA and NPV both measure value created after charging for invested capital, so higher EVA is associated with higher NPV. Their relationship is therefore direct rather than inverse.
Report an error
The more specific you are, the faster it gets fixed. A source beats an opinion.
Prefer email? [email protected]
About Business Finance
Business finance explains how organisations plan, obtain and use money while balancing risk, return and liquidity. Topics include financial statements, time value of money, budgeting, working capital, capital structure, sources of finance, investment appraisal and cost of capital. Capital budgeting evaluates long-term projects, whereas working capital manages day-to-day operations.
Practise Business Finance
975 free Business Finance MCQs from Management Sciences, each with the correct answer and an explanation. Unlimited attempts, no account needed.
Discussion
Stuck on an option, or know a faster way to get there? Ask or explain it here.
No comments yet. Be the first to explain this one.
Exams that ask Management Sciences questions like this
Management Sciences is on 2 papers prepared for on TestUstad, and all of them draw the same bank, so this question is worth knowing for every one of them.
More Business Finance questions
An uncovered cost at start of year is $200, full cash flow during recovery year is $400 and prior years to full recovery is 3 then payback would be ________?
In capital budgeting, the positive net present value results in _________?
An uncovered cost at the start of year is divided by full cash flow during recovery year then added in prior years to full recovery for calculating ____________?
In the mutually exclusive projects, the project which is selected for comparison with others must have _________?
A project whose cash flows are more than the capital invested for rate of return then the net present value will be _________?
The high price to earnings ratio shows companies ____________?