Multiple Choice Test Bank
Finance for Executives Managing
for Value Creation, 8th Edition by
Gabriel Hawawini
Complete Chapter Test Bank
are included (Ch 1 to 19)
** Immediate Download
** Swift Response
** All Chapters included
,Table of Contents are given below
Chapter 1: Financial Management and Value Creation: An Overview
Chapter 2: The Time Value of Money
Chapter 3: The Time Value of Money
Chapter 4: Interpreting Financial Statements
Chapter 5: Analyzing Operational Efficiency and Liquidity
Chapter 6: Analyzing Profitability, Risk, and Growth
Chapter 7: Using the Net Present Value Rule to Make Value-Creating Investment
Decisions
Chapter 8: Alternatives to the Net Present Value Rule
Chapter 9: Identifying and Estimating a Project’s Cash Flows
Chapter 10: Valuing Bonds and Stocks
Chapter 11: Raising Capital and Paying Out Cash
Chapter 12: Estimating the Cost of Capital
Chapter 13: Designing a Capital Structure
Chapter 14: Valuing and Acquiring a Business
Chapter 15: Managing Corporate Risk
Chapter 16: Understanding Forward, Futures, and Option Contracts and Their
Contribution to Corporate Finance
Chapter 17: Making International Business Decisions
Chapter 18: Sustainability and Corporate Finance
Chapter 19: Managing for Value Creation
,The test bank is organized in reverse order, with the last chapter displayed first, to ensure that all
chapters are included in this document. (Complete Chapters included Ch19-1)
Chapter 19 – Managing for Value Creation
1. Which of the following is the correct calculation of Market value added (MVA)?
a. MVA = Capital employed / Market value of capital
b. MVA = Market value of capital – Capital employed
c. MVA = Market value of capital + Capital employed
d. MVA = Market value of capital / Capital employed
Answer: B
2. In order to calculate MVA, a firm must know which of the following?
a. Market value of the firm’s equity
b. Market value of the firm’s debt capital
c. Amount of capital shareholders and debt holders have invested
d. All of the above
Answer: D
3. Which of the following is NOT included in capital employed?
a. Long-term borrowings
b. Cash
c. Lease obligations
d. Provision for pension plans
Answer: B
4. What should NOT be added to the book value of equity for purposes of calculating
capital employed?
a. Provision for bad debt
b. Impairment of goodwill
c. Depreciation
d. Research and Development expenses
Answer: C
5. Which of the following statements is NOT true for interpreting market value added?
a. Maximizing MVA is consistent with maximizing shareholder value.
b. Maximizing the market value of the firm’s capital implies value creation.
c. MVA increases when the firm undertakes positive net present value projects.
d. MVA = Equity MVA + Debt MVA
Answer: B
For use with Finance for Executives: Managing for Value Creation 8th edition
by Gabriel Hawawini and Claude Viallet, ISBN 9781473795570
© 2025 Cengage Learning EMEA
, 6. Which of the following statements is NOT true for interpreting market value added?
a. A company’s estimated MVA is the market value of its capital less its capital
employed.
b. When MVA is positive, the company has created value; when it is negative, the
company has destroyed value.
c. When we compare two companies, the one with the highest MVA is the one that
has created the most value.
d. MVA measures value creation and destruction in absolute terms, not in relative
terms.
Answer: C
7. The top value-creating companies are spread across a variety of industries, although one
sector dominates. Which sector is it?
a. Distribution
b. Drug manufacturing
c. Data processing
d. Technology
Answer: D
8. Apart from US companies, the other top value-creating companies came mostly from
which country?
a. Germany
b. Japan
c. China
d. UK
Answer: C
9. A firm’s capacity to create value is driven by a few factors. Which is NOT one of them?
a. ROIC
b. Market share
c. Ability to grow
d. WACC
Answer: B
10. What is the correct formula to calculate market value added?
a. Market value added = (WACC – Growth rate) / [(ROIC – WACC) × Invested capital]
b. Market value added = (WACC – Growth rate) / [(WACC - ROIC) × Invested capital]
c. Market value added = [(ROIC – WACC) × Invested capital] / (WACC – Growth rate)
d. Market value added = [(WACC - ROIC) × Invested capital] / (WACC – Growth rate)
Answer: C
For use with Finance for Executives: Managing for Value Creation 8th edition
by Gabriel Hawawini and Claude Viallet, ISBN 9781473795570
© 2025 Cengage Learning EMEA
Finance for Executives Managing
for Value Creation, 8th Edition by
Gabriel Hawawini
Complete Chapter Test Bank
are included (Ch 1 to 19)
** Immediate Download
** Swift Response
** All Chapters included
,Table of Contents are given below
Chapter 1: Financial Management and Value Creation: An Overview
Chapter 2: The Time Value of Money
Chapter 3: The Time Value of Money
Chapter 4: Interpreting Financial Statements
Chapter 5: Analyzing Operational Efficiency and Liquidity
Chapter 6: Analyzing Profitability, Risk, and Growth
Chapter 7: Using the Net Present Value Rule to Make Value-Creating Investment
Decisions
Chapter 8: Alternatives to the Net Present Value Rule
Chapter 9: Identifying and Estimating a Project’s Cash Flows
Chapter 10: Valuing Bonds and Stocks
Chapter 11: Raising Capital and Paying Out Cash
Chapter 12: Estimating the Cost of Capital
Chapter 13: Designing a Capital Structure
Chapter 14: Valuing and Acquiring a Business
Chapter 15: Managing Corporate Risk
Chapter 16: Understanding Forward, Futures, and Option Contracts and Their
Contribution to Corporate Finance
Chapter 17: Making International Business Decisions
Chapter 18: Sustainability and Corporate Finance
Chapter 19: Managing for Value Creation
,The test bank is organized in reverse order, with the last chapter displayed first, to ensure that all
chapters are included in this document. (Complete Chapters included Ch19-1)
Chapter 19 – Managing for Value Creation
1. Which of the following is the correct calculation of Market value added (MVA)?
a. MVA = Capital employed / Market value of capital
b. MVA = Market value of capital – Capital employed
c. MVA = Market value of capital + Capital employed
d. MVA = Market value of capital / Capital employed
Answer: B
2. In order to calculate MVA, a firm must know which of the following?
a. Market value of the firm’s equity
b. Market value of the firm’s debt capital
c. Amount of capital shareholders and debt holders have invested
d. All of the above
Answer: D
3. Which of the following is NOT included in capital employed?
a. Long-term borrowings
b. Cash
c. Lease obligations
d. Provision for pension plans
Answer: B
4. What should NOT be added to the book value of equity for purposes of calculating
capital employed?
a. Provision for bad debt
b. Impairment of goodwill
c. Depreciation
d. Research and Development expenses
Answer: C
5. Which of the following statements is NOT true for interpreting market value added?
a. Maximizing MVA is consistent with maximizing shareholder value.
b. Maximizing the market value of the firm’s capital implies value creation.
c. MVA increases when the firm undertakes positive net present value projects.
d. MVA = Equity MVA + Debt MVA
Answer: B
For use with Finance for Executives: Managing for Value Creation 8th edition
by Gabriel Hawawini and Claude Viallet, ISBN 9781473795570
© 2025 Cengage Learning EMEA
, 6. Which of the following statements is NOT true for interpreting market value added?
a. A company’s estimated MVA is the market value of its capital less its capital
employed.
b. When MVA is positive, the company has created value; when it is negative, the
company has destroyed value.
c. When we compare two companies, the one with the highest MVA is the one that
has created the most value.
d. MVA measures value creation and destruction in absolute terms, not in relative
terms.
Answer: C
7. The top value-creating companies are spread across a variety of industries, although one
sector dominates. Which sector is it?
a. Distribution
b. Drug manufacturing
c. Data processing
d. Technology
Answer: D
8. Apart from US companies, the other top value-creating companies came mostly from
which country?
a. Germany
b. Japan
c. China
d. UK
Answer: C
9. A firm’s capacity to create value is driven by a few factors. Which is NOT one of them?
a. ROIC
b. Market share
c. Ability to grow
d. WACC
Answer: B
10. What is the correct formula to calculate market value added?
a. Market value added = (WACC – Growth rate) / [(ROIC – WACC) × Invested capital]
b. Market value added = (WACC – Growth rate) / [(WACC - ROIC) × Invested capital]
c. Market value added = [(ROIC – WACC) × Invested capital] / (WACC – Growth rate)
d. Market value added = [(WACC - ROIC) × Invested capital] / (WACC – Growth rate)
Answer: C
For use with Finance for Executives: Managing for Value Creation 8th edition
by Gabriel Hawawini and Claude Viallet, ISBN 9781473795570
© 2025 Cengage Learning EMEA
