Question
(Economic value added) Drew Concrete uses Economic Value Added as a financial performance measure. Drew has...
(Economic
value
added)
Drew Concrete uses Economic Value Added as a financial performance measure. Drew has
$ 260 million
million in assets, and the firm has financed its assets with
65%
equity and
35%
debt with an interest rate of
7%
The firm's opportunity cost on its funds is
15%
while the operating return on the firm's assets is
13 %
a. What is the Economic Value Added created or destroyed by Drew Concrete?
b. What does Economic Value Added measure?
a. What is the Economic Value Added (EVA) created or destroyed by Drew Concrete? Enter a positive number for EVA created or a negative number for EVA destroyed.
$
million (Round to one decimal place.)
b. What does Economic Value Added measure? (Select the best choice below.)
A.
Economic Value Added (EVA) provides an approach to evaluate a firm's performance in terms of shareholder value creation.
B.
Economic Value Added (EVA) provides an approach to indicate the rate of return earned on the firm's assets.
C.
Economic Value Added (EVA) measures a firm's ability to meet its interest payments from its annual operating earnings.
D.
Economic Value Added (EVA) measures the rate of return earned on the common stockholders' investment.
Homework Answers
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