Decomposition of Net Final Values: Systemic Value Added and Residual Income

This paper proposes a model aiming at decomposing the Net Final Value of project under certainty. It makes use systemic outlook: investor's net worth is regarded as dynamic system whose structure changes over time. On this basis, profitability index presented, here named Systemic Added (SVA), which lends itself to periodic decomposition: shares formally translate economic concept residual income (or excess profit). While an overall coincides with (NFV) investment, partition SVA shown differ from NFV decomposition proposed by Peccati (1987, 1991, 1992), in turn bears strong resemblance Stewart's (1991) EVA model. The and NFV-based bear interesting relations: introducing shadow can be re-shaped so that accomplished applying Peccati's argument project, or, same, computing project's Economic Added. then generalizes approach allowing for portfolio projects, multiple debts synchronic opportunity costs capital, tetra-dimensional easily obtained.