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Wal-mart Real Life Example

Wal-mart Real Life Example

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Wal-mart Real Life Example

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  1. Wal-martReal Life Example

  2. MVA = f (EVA) M A R K E T V A L U E M V A EVA1 + EVA2 + … (1+c) (1+c)2 C A P I T A L

  3. Wal-martMVA = f(EVA) ? • In 1998 … MVA = $159 billion EVA ~ $1.1 billion

  4. 12.2% 26% 6.2% 9.2% 2.2%

  5. Wal-martMVA = f(EVA) ? • In 1998 … MVA = $159 billion EVA ~ $1.1 billion • What if … 12% EVA growth 6% Discount rate 40 years, no terminal value BINGO! NPV of EVA equals MVA