Gebze Shipyards has $11.0 million in total invested operating capital, and its WACC is 9%. Gebze...
Gebze Shipyards has $11.0 million in total invested operating
capital, and its WACC is 9%. Gebze has the following income
statement:
|
Sales |
$12.0 million |
|
Operating costs |
6.0 million |
|
Operating income (EBIT) |
$ 6.0 million |
|
Interest expense |
2.0 million |
|
Earnings before taxes (EBT) |
$ 4.0 million |
|
Taxes (20%) |
0.8 million |
|
Net income |
$ 3.2 million |
What is Gebze’s EVA?
Homework Answers
EVA = EBIT(1 - Tax) - (WACC × Total invested capital)
EVA = $6,000,000(1 - 0.20) - (0.09 × $11,000,000)
EVA = $4,800,000 - $990,000
EVA = 3,810,000
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