Business Case Studies & Business Publications

Value Creation, Net Present Value, and E...

Harris, Robert S.

Case

Value Creation, Net Present Value, and Economic Profit

Harris, Robert S.

F-1164 | Published January 10, 1997 | 18 pages Case

Collection: Darden School of Business

Product Details

This technical note compares economic-profit (economic value added) and net-present-value techniques for evaluating corporate investments and performance. The note shows the relationship between the two approaches and sets out the conditions under which they yield the same conclusions about value creation. It also discusses the differences in their estimation and use and talks about some of the difficulties of application. The note is useful for students who have already been exposed to net-present-value techniques.