I want a complete valuation of the company, Electronic Arts (Nasdaq: EA), using the residual income/ economic profit valuation method and not the DCF method. The valuation should also include detailed...

1 answer below »
I want a complete valuation of the company, Electronic Arts (Nasdaq: EA), using the residual income/ economic profit valuation method and not the DCF method. The valuation should also include detailed explanations of all assumptions made. I have attached the financial statements of the company.
Answered Same DayMar 12, 2021

Answer To: I want a complete valuation of the company, Electronic Arts (Nasdaq: EA), using the residual income/...

Preeta answered on Mar 12 2021
134 Votes
Economic profit method or the residual income method is a measure used to ascertain the value of a company. It uses the economic value added to get the profitability. As per this concept, profit actually occurs when something extra is created that is some wealth is created. A business cannot survive in the long run without creating value.
The formula which is used to calculate economic value added is as follows:
EVA = NOPAT – (WACC * capital invested)
Where, EVA = Economic Value Added
NOPAT = Net Operating Profits after Tax
WACC = Weighted Average Cost of...
SOLUTION.PDF

Answer To This Question Is Available To Download

Related Questions & Answers

More Questions »

Submit New Assignment

Copy and Paste Your Assignment Here