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Hello
I have a question regarding the treatment of economic depreciation in the EVA calculation. If we are given the replacement value of the asset at the beginning of the year then should we adjust it for economic depreciation?Hi,
To calculate Economic value of net assets for EVA calculation – you will need to use replacement cost of non-current assets as this represents their true value.If the replacement cost opening figure is given to you then there is no reason to adjust it further unless something in the scenario suggests this replacement cost has changed since – e.g. the non-current asset has become impaired.
Hope that explains ok 🙂
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