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Economic Value added is basically formula driven number . How formula derived mentioned in below . All number already given in the Question _ NOPAT ( Net Operating Profit after tax , WACC , Capital Invested )
| Economic Value Added ( EVA) | ||
| Normally use following formula to calculate EVA | ||
| EVA | NOPAT-( WACC*Capital Employed) | |
| NOPAT - | Net Operating profit After tax | |
| NOPAT -($) (a) | 1,32,41,678 | |
| ( already given in the Question ) | ||
| WACC ( Weighted Average Cost of Capital ) | Already given in the Question | 9% |
| Formula to use | ||
| ke*( E/E+D)+kd(1-t)*(D/E+D) | ||
| Where Ke- required return on Equity | ||
| kd(1-t)- after tax return on Debt | ||
| E - Equity , D - Debt | ||
| Capital Invested($) | 12,51,64,480 | |
| EVA ($) | NOPAT-( WACC*Capital Employed) | 19,76,875 |
| 13241678-(9%*125164480) |
Falcon is creating ,,
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Washington Company has two divisions: the Adams Division and the Jefferson Division. The following information pertains...
Washington Company has two divisions: the Adams Division and the
Jefferson Division. The following information pertains to last
year's results:
Adams Division Jefferson Division
Net (after-tax) income $611,050 $359,100
Total capital employed 4,720,000 3,672,500
Washington's actual cost of capital was 11%.
Required:
1. Calculate the EVA for the Adams Division. If required, enter
a negative EVA as a negative number by entering your answer with
the minus sign.
$
2. Calculate the EVA for the Jefferson Division. If required,
enter...
Tgnacio, Inc, had after-tax operating income last year of $1,198,000. Three souroes of finanoing were used...
Tgnacio, Inc, had after-tax operating income last year of $1,198,000. Three souroes of finanoing were used by the company: $2 milion of mortgage bonds paying 4 percent interest, $5 million of unsecured bonds paying 6 peroent interest, and $11 million in common stock, which was onsidered to be relatively risky (with a risk premium of 8 percent). The rate on long-term trensuries is 3 percent. Ignacio, Inc, pays a marginal tax rate of 30 percent Required: 1. Calculate the after-tax...
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Calculating Economic Value Added East Mullett Manufacturing earned operating income last year as shown in the...
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Calculating Economic Value Added East Mullett Manufacturing earned operating income last year as shown in the...
Calculating Economic Value Added East Mullett Manufacturing earned operating income last year as shown in the following income statement: Sales $630,000 Cost of goods sold 380,000 Gross margin $250,000 Selling and administrative expense 174,400 Operating income $ 75,600 Less: Income taxes (@ 40%) 30,240 Net income $ 45,360 Total capital employed equaled $391,000. East Mullett's actual cost of capital is 8 percent. Required: Calculate the EVA for East Mullett Manufacturing.
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Calculating Economic Value Added Barnard Manufacturing earned operating income last year as shown in the following...
Calculating Economic Value Added Barnard Manufacturing earned operating income last year as shown in the following income statement: Sales $4,000,000 Cost of goods sold 2,100,000 Gross margin $1,900,000 Selling and administrative expense 1,100,000 Operating income $800,000 Less: Income taxes (@ 40%) 320,000 Net income $480,000 At the beginning of the year, the value of operating assets was $2,700,000. At the end of the year, the value of operating assets was $2,300,000. Total capital employed equaled $1,400,000. Barnard’s actual cost of...
Calculating Weighted Average Cost of Capital and Economic Value Added (EVA) Ignacio, Inc., had after-tax operating income last year of $1,196,500. Three sources of financing were used by the company: $1 million of mortgage bonds paying 4 percent interest, $5 million of unsecured bonds paying 6 percent interest, and $11 million in common stock, which was considered to be relatively risky (with a risk premium of 8 percent). The rate on long-term treasuries is 3 percent. Ignacio, Inc., pays a...
Tgnacio, Inc, had after-tax operating income last year of $1,198,000. Three souroes of finanoing were used by the company: $2 milion of mortgage bonds paying 4 percent interest, $5 million of unsecured bonds paying 6 peroent interest, and $11 million in common stock, which was onsidered to be relatively risky (with a risk premium of 8 percent). The rate on long-term trensuries is 3 percent. Ignacio, Inc, pays a marginal tax rate of 30 percent Required: 1. Calculate the after-tax...
Washington Company has two divisions: the Adams Division and the
Jefferson Division. The following information pertains to last
year's results:
Adams Division Jefferson Division
Net (after-tax) income $611,050 $359,100
Total capital employed 4,720,000 3,672,500
Washington's actual cost of capital was 11%.
Required:
1. Calculate the EVA for the Adams Division. If required, enter
a negative EVA as a negative number by entering your answer with
the minus sign.
$
2. Calculate the EVA for the Jefferson Division. If required,
enter...
Tgnacio, Inc, had after-tax operating income last year of $1,198,000. Three souroes of finanoing were used by the company: $2 milion of mortgage bonds paying 4 percent interest, $5 million of unsecured bonds paying 6 peroent interest, and $11 million in common stock, which was onsidered to be relatively risky (with a risk premium of 8 percent). The rate on long-term trensuries is 3 percent. Ignacio, Inc, pays a marginal tax rate of 30 percent Required: 1. Calculate the after-tax...
Transfer Pricing Aulman Inc. has a number of divisions including a Furniture Division and a Motel Division. The Motel Division owns and operates a line of budget motels located along major highways. Each year, the Motel Division purchases furniture for the motel rooms. Currently, it purchases a basic dresser from an outside supplier for $50. The manager of the Furniture Division has approached the manager of the Motel Division about selling dressers to the Motel Division. The full product cost...
Calculating Economic Value Added East Mullett Manufacturing earned operating income last year as shown in the following income statement: Sales $630,000 Cost of goods sold 380,000 Gross margin $250,000 Selling and administrative expense 174,400 Operating income $ 75,600 Less: Income taxes (@ 40%) 30,240 Net income $ 45,360 Total capital employed equaled $391,000. East Mullett's actual cost of capital is 8 percent. Required: Calculate the EVA for East Mullett Manufacturing.
Calculating Economic Value Added East Mullett Manufacturing earned operating income last year as shown in the following income statement: Sales $630,000 Cost of goods sold 380,000 Gross margin $250,000 Selling and administrative expense 174,400 Operating income $ 75,600 Less: Income taxes (@ 40%) 30,240 Net income $ 45,360 Total capital employed equaled $391,000. East Mullett's actual cost of capital is 8 percent. Required: Calculate the EVA for East Mullett Manufacturing.
Calculating Economic Value Added Barnard Manufacturing earned operating income last year as shown in the following income statement: Sales $4,000,000 Cost of goods sold 2,100,000 Gross margin $1,900,000 Selling and administrative expense 1,100,000 Operating income $800,000 Less: Income taxes (@ 40%) 320,000 Net income $480,000 At the beginning of the year, the value of operating assets was $2,700,000. At the end of the year, the value of operating assets was $2,300,000. Total capital employed equaled $1,400,000. Barnard's actual cost of...
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