Financial Calculations & Valuation Intermediate

Calculate Economic Value Added (EVA) & Market Value Added (MVA) in Python

Compute corporate economic profit after cost of capital by calculating Economic Value Added (EVA) and Market Value Added (MVA) in Python.

#numpy

Problem Statement

Traditional net income ignores the cost of equity capital. Economic Value Added (EVA) measures true economic profit generated above the investor hurdle rate.

Formula / Core Logic

EVA = NOPAT - (Total_Capital * WACC)

Installation

pip install numpy

economic-value-added-eva-calculator-python.py

def calculate_economic_value_added(nopat, total_capital_employed, wacc_pct):
    wacc = wacc_pct / 100.0
    capital_charge = total_capital_employed * wacc
    eva = nopat - capital_charge
    return {'Capital_Charge': round(capital_charge, 2), 'Economic_Value_Added_EVA': round(eva, 2), 'Value_Creation': eva > 0}