The capital charge equation cannot be applied in the Cash Value Added approach. The value spread equation in the example is:
• Cash Value Added = (CFROI - capital costs) x
gross investment base
• Cash Value Added = (21.15% - 6.0%) x 1,504.68
= 227.96
See Table 6 for a summary of the comparisons.
Table 7 compares selected features of the four
approaches.