DETERMINATION OF ECONOMIC VALUE ADDED FOR A PROPOSED INVESTMENT IN NEW MANUFACTURING |
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| Authors: | WILLIAM G. SULLIVAN KIM LASCOLA NEEDY |
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| Affiliation: | 1. Virginia Polytechnic Institute and State University;2. University of Pittsburgh |
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| Abstract: | This paper discusses a measure for estimating the wealth creation potential of capital investments in manufacturing. The measure, called “Economic Value Added,” has recently become popular in the United States and can be derived from an after-tax analysis of cash flows generated by a capital investment. A proposed investment in manufacturing capacity is analyzed to illustrate the after-tax cash flow calculations required to determine its EVA potential. |
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