A policy of maximizing the present value of economic value added over time should be the equivalent of a policy of maximizing firm value. Many firms use the book value of capital invested as their measure of capital invested. To the degree that book value reflects accounting choices made over time, this may not be true. Again, the accounting definition of return on capital may not reflect the economic return on capital. The operating income also has to be cleansed of any cosmetic or temporary effects.
DCF valuation assumes that cost of capital is calculated using market values of debt and equity.
If it assumed that both assets in place and future growth are financed using the market value mix, the EVA should also be calculated using the market value. If instead, the entire debt is assumed to be carried by assets in place, the book value debt ratio will be used to calculate cost of capital. Implicit then is the assumption that as the firm grows, its debt ratio will approach its book value debt ratio. The advantage of this comparison is that it is simple and does not require the making of forecasts about future earnings potential. Another advantage is that it can be broken down by any unit - person, division etc., as long as one is willing to assign capital and allocate earnings across these same units.