EVA

in the latest bpp text (page 321) there is a worked example to value a target. i have reproduced the answer that uses FCF and EVA. year ------------0----------1-------------2-------------3-------------4-------------5 Invested Capital------2000-------1600-----1200---------800----------400----------0 NOPAT -----0--------------88---------160--------400-----------440---------200 Less change in invested capital-------(2000)------400--------400-------400------------400--------400 FCF----------(2000)------488--------560-------800-----------840---------600 DF WACC 10%----1---------.91----------.83--------.75-----------.68----------..62 PV OF CASHFLOW-(2000)----444--------463--------601----------574-----------373 NPV=454 ---------------------------------------------------------------------------------------------------- ROIC (%)---------------------4--------10--------------33----------55------------50 EVA=(ROIC-WACC) X BV CAPITAL INVESTED------------------(112)-----0--------------280---------360----------160 WACC 10%-------1---------.91----------.83--------.75-----------.68----------..62 PV OF EVA----------------------------(102)--------0----------210-----------246----------99 PV=454 pls note that there is no question...they just show this working. i dont understand where/how they get (112) in the lower working thanks