Consider the following data for the firms Acme and Apex: Equity ($ million) Debt ($ million) ROC
Question:
Consider the following data for the firms Acme and Apex:
Equity ($ million)
Debt ($ million)
ROC (%)
Cost of Capital (%)
Acme 100 50 17 9 Apex 450 150 15 10
a. Which firm has the higher economic value added?
b. Which firm has the higher economic value added per dollar of invested capital?
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