Question

Estimate a firm’s economic value added (EVA) if EBIT is $600,000, amount of financial capital is...

Estimate a firm’s economic value added (EVA) if EBIT is $600,000, amount of financial capital is $1,600,000, WACC is 19.0% and tax rate is 30%.

a $103,000

b $65,000

c $116,000

d $89,000

e $62,000

Please help Thank you so much!

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Homework Answers

Answer #1

  

_______________________________

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EVA = Net Operating income after taxes - WACC * Capital Employed

= EBIT * (1-0.30) - 19% * 1,600,000

= 600,000  * (1-0.30) - 19% * 1,600,000

= 420000 - 304000

= 116000

Option C is correct.   

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