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Hello tutor, I am confused the calculation of EVA. I give 2 calculations of EVAs in APM technical article & Stillwater Services (12/12, amended) in BPP kit.
For APM technical article
+ I hope you can check in ACCA
+ Project Z is not completed, it is included in NOPAT & capitalised in adjusted capital employedFor Stillwater Services (12/12, amended) in BPP kit.
+ I hope you can check in BPP kit
+ Project is not completed, it is only included in NOPAT. But it is NOT capitalised in adjusted capital employed.It may be confused, I hope to receive your explanations if it R&D cost of uncompleted project can be capitalised in adjusted capital employed. Thanks tutor a lot !
In Stillwater, this is the first year of the project.
The capital employed that you need to use in EVA is the OPENING capital employed and that wouldn’t have been affected by the new project,
In the article, the project had been going for 2 years with 500 spent in each. The first year’s 500 is added to capital employed and the second year’s is added to NOPAT. It’s a pity the example used the same expenditure for both years to make this point clear.
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