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.

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