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1. A firm produces $65 million of net income on $2,030 million of assets. Given that investors expect a 5 percent return, what is the
1. A firm produces $65 million of net income on $2,030 million of assets. Given that investors expect a 5 percent return, what is the EVA? Answer: -$36.5 million
2. A firm produces $124 million of net income on $1,600 million of assets. Through a six-sigma project, the firm is able to decrease the assets employed to $1,450 million. Given a 5 percent cost of capital, what is the increase in the EVA? Answer: $7.5 million
Please show work because I cannot figure out how they got those answers. Thank you.
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