Intermediate. A company has reported annual operating profits for the year of 89.2m after charging 9.6m for
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Intermediate. A company has reported annual operating profits for the year of £89.2m after charging £9.6m for the full development costs of a new product that is expected to last for the current year and two further years. The cost of capital is 13 per cent per annum. The balance sheet for the company shows fixed assets with a historical cost of £120m. A note to the balance sheet estimates that the replacement cost of these fixed assets at the beginning of the year is £168m. The assets have been depreciated at 20 per cent per year.
The company has a working capital of £27.2m.
Ignore the effects of taxation.
The economic valued added® (EVA™) of the company is closest to:
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