Homework Answers
Solution :-
Economic Value Added = ( ROC - Cost of Capital ) * Total Assets
A-1
Now Economic Value Added for Acme = (17% - 9% ) * ( 150 + 75 ) = 8% * (225) = $18
Now Economic Value Added for Apex = (15% - 10%) * ( 750 + 250 ) = 5% * 1000 = $50
A-2
Apex has higher Economic Value added
B-1
Now Economic Value Added for Acme per dollar = (17% - 9% ) * ( 1$ ) = 8% * ( 1$ ) = $0.08
Now Economic Value Added for Apex = (15% - 10%) * ( 1$ ) = 5% * 1$ = $0.05
B-2
Acme has higher Economic Value added in case of per dollar
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