Over the years, masterson corporation’s stockholders have provided $34,000,000 of capital when they purchased new issues of stock and allowed management to retain some of the firm’s earnings. the firm now has 2,000,000 shares of common stock outstanding, and the shares sell at a price of $28 per share. how much value has masterson’s management added to stockholder wealth over the years, that is, what is masterson’s mva? brigham, eugene f.. fundamentals of financial management (p. 96). south-western college pub. kindle edition.

 Market value added:              22,000,000 dollars

Explanation:

The market value added calcualtes the difference between the market value of a company (shares outstanding x market value) and investment made by shareholders (capital contribution) and bondholders (claim against capital)

In this case, we are given no inforamtion about a debt so we just consider the stockholders investmet:

MVA: market value - capital contribution

market value 2,000,000 x 28 = 56,000,000

capital contribution                    (34,000,000)  

   Market value added:              22,000,000

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