[Evan]

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I think you guys are both saying the same thing. The OP was talking about calculating the cost of equity in general (in the passage you quoted), not specifically the EVA method.

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Let me be more clear then. Stern Stewart has registered a trademark for EVA, so when you say "EVA" you aren't talking about the general concept, you are talking about Stern Stewarts EVA(R), whose underlying process is kept proprietary BTW. But if you read their materials, it appears clear that EVA(R) always uses Beta to estimate cost of equity. This is why EVA(R) is criticized by Munger.

Other than that, trying to "own" a concept so simple and obvious is the only other thing I'd criticize Stern Stewart for. Of course you never borrow money to invest at a lower return that you pay in interest. Just like you never invest any capital at lower returns than are available elsewhere.

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It still sounds like everyone's saying the same thing to me. Maybe I'm misunderstanding the OP, but so far I've agreed with everything you've said.