Question

Herbal Resources is a small but profitable producer of dietary supplements for pets. This is not a high-tech business, but Herbal's earnings have averaged around $1.3 million after tax, largely on the strength of its patented enzyme for making cats nonallergenic. The patent has eight years to run, and Herbal has been offered $3.9 million for the patent rights. Herbal's assets include $2.1 million of working capital and $8.2 million of property, plant, and equipment. The patent is not shown on Herbal's books. Suppose Herbal's cost of capital is 16%. What is its EVA? (A negative answer should be indicated by a minus sign. Do not round intermediate calculations. Enter your answer in millions rounded to 3 decimal places.) million EVA

Answer 1

EVA [economic uahue adde (Invertment tast of capiha) Income eained tapital given Cosl ef Inlome 13 million tauned nvetment patert value wor king capital Property , plantuipmert value 3.q milion * milion 8. milliorns + 14milliong 1.300 million 143 milion X EVA 1.300m-2.232 illior 0.972 million - omment, it you ned any clarification [olear CS Scanned with CamScanner