Embedded value

Abstract: The metric Economic Value Added, or EVA, has recently become quite popular for analyzing company balance sheets, determining executive compensation packages and even project selection. The analysis entails comparing net after-tax operating profit against the allocated cost of capital for a given period. This paper shows, in general, that Market Value Added (MVA), which is the present value of a series of EVA values, 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. Additionally, insight is provided into the rationale behind EVA analysis through an interpretation of its capital and income allocation procedure for investment projects.

Abstract: An accessible guide to the essential issues of corporate financeWhile you can find numerous books focused on the topic of corporate finance, few offer the type of information managers need to help them make important decisions day in and day out.Value explores the core of corporate finance without getting bogged down in numbers and is intended to give managers an accessible guide to both the foundations and applications of corporate finance. Filled with in-depth insights from experts at McKinsey & Company, this reliable resource takes a much more qualitative approach to what the authors consider a lost art. - Discusses the four foundational principles of corporate finance - Effectively applies the theory of value creation to our economy - Examines ways to maintain and grow value through mergers, acquisitions, and portfolio management - Addresses how to ensure your company has the right governance, performance measurement, and internal discussions to encourage value-creating decisions A perfect companion to the Fifth Edition of Valuation, this book will put the various issues associated with corporate finance in perspective.

Abstract: Acknowledgments. Foreword. Preface. Introduction: Standards of Value. 1 Common Standards and Premises of Value. Common Standards and Premises. Price, Value, and Cost. Defining a Standard of Value. Premises of Value. Common Standards of Value. Fair Market Value. Fair Value. Investment Value. Intrinsic Value. Book Value. Common Operational Premises Underlying the Standard of Value. Going Concern. Liquidation Value. Other Issues. Fair Value in Alternate Contexts. Fair Market Value in Alternate Contexts. Standards of Value in the International Context. Summary. 2 Fair Market Value in Estate and Gift Tax. Introduction. Common Definitions of Fair Market Value. History of Fair Market Value. Elements of Fair Market Value. Price at Which a Property Would Change Hands. Willing Buyer. Willing Seller. No Compulsion to Buy or Sell. Reasonable Knowledge of Relevant Facts. Common Discounts. Summary. 3 Fair Value in Shareholder Dissent and Oppression. Introduction. Fair Value. Early References to Fair Value. Fair Value as Defined by Various Authorities and Statutes. Dissentera s Rights. Overview and History. Growth in Popularity of the Appraisal Remedy. Context of Modern Appraisal Rights. Oppression Remedy. Development of Oppression Remedy. Alternative Remedies. Context of Oppression Remedy. Freeze-Outs and Squeeze-Oouts. Recognizing Oppression. Reasonable Expectations. Breach of Fiduciary Duty. Heavy-Handed and Arbitrary or Overbearing Conduct. Standard of Value in the 50 States. Breaking Down the Components of Fair Value. Before the Effectuation of the Corporate Action to Which the Shareholder Objects. Excluding Any Appreciation or Depreciation in Anticipation of the Corporate Action Unless Exclusion Would Be Inequitable. Current and Customary Valuation Techniques. Discounts and Premiums. Level of Value. Other Shareholder Level Discounts. Entity-Level Discounts. Control Premiums. Extraordinary Circumstances. Equitable Adjustments. Delawarea s Entire Fairness. Consideration of Wrongdoing in Calculating Fair Value. Discounts Used as an a Equitable Adjustmenta . Damage Claims. Fair Value and the Minority Shareholder. Summary. 4 Standards of Value in Divorce. Introduction. Marital Property: General Background and History. Identification of Marital Property and Separate Property. Relationship between Valuation and Identification of Intangible Assets. Appreciation on Separate Property. Premises and Standards of Value in Divorce. Premises of Value. Standards of Value. Premises of Value Revealed through the Valuation of Insurance Agencies. Concepts of Value under the Two Premises. Standards of Value in Divorce among the 50 States. Lack of Statutory Insight. Revealing Standard of Value through Case Law. Toward a Standard of Value Classification System. Value in Exchange. Goodwill. Lack of Control and Marketability Discounts under Value in Exchange. Buy-Sell Agreements under Value in Exchange. Value to the Holder. Goodwill. Shareholder Level Discounts under the Value to the Holder Premise. Buy-Sell Agreements under Value to the Holder. Summary. 5 Fair Value in Financial Reporting. Introduction. Fair Value in Financial Reporting: What Is It? History of Fair Value in U.S. Accounting Literature. Application of the Fair Value Standard to Business Combinations. Application of the Fair Value Standard to Asset Impairment Tests. Interpretation of Fair Value Compared to Other Standards of Value. Fair Value in Financial Reporting versus Fair Value in Dissentersa Rights Cases. Fair Value in Financial Reporting versus Investment Value. Fair Value in Financial Reporting versus Fair Market Value. Audit Issues. Summary. Sources of Information. Appendix A International Business Valuation Standards. Appendix B Fair Value in Dissent and Oppression Chart. Appendix C Standard of Value Divorce Chart .

Abstract: Conventional NPV formulas suggest that a project's net present value is simply the sum of the present values of its net cash flows. An alternative view sees net present value as the difference between the initial wealth and the present value of the terminal wealth attributable to the project. This “incremental wealth” view requires a generalized formula which provides explicitly for the opportunity costs associated with interim cash flows. This paper discusses the limitations of conventional NPV formulas, the need for a generalized net present value formula, the use of this generalized formula to evaluate financing as well as investment opportunities and the linkage between net present value formulas and rate of return criteria.