A company has reported annual operating profits for the year of 89.2m after charging 9.6m for the

Question:

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 percent 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 percent per year. The company has a working capital of £27.2m. Ignore the effects of taxation.

The economic valued added® (EVA(^TM)) of the company is closest to:
(a) 64.16m
(b) 70.56m
(c) 83.36m
(d) 100.96m

Balance Sheet
Balance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial... Cost Of Capital
Cost of capital refers to the opportunity cost of making a specific investment . Cost of capital (COC) is the rate of return that a firm must earn on its project investments to maintain its market value and attract funds. COC is the required rate of...

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