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Barton Industries has operating income for the year of $3,700,000 and a 25% tax rate. Its total invested capital is $20,000,0

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Answer #1

EVA = Operating income (1-tax)- invested capital × cost of capital

Operating Income -$3,700,000

Tax -25%

Total invested capital $20,000,000

Cost of capital -6%

EVA= $3700,000(1-25%)-$20,000,000×6%

EVA= $3,700,000(0.75)-$20,000,000×6%

EVA= $2,775,000-$1,200,000=$1,575,000.

Barton industries has EVA = $1,575,000.

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