8. Value added to a firm

Last year, Jackson Tires reported net sales of $40,000,000 and total operating costs (including depreciation) of $26,000,000. Jackson Tires has $43,500,000 of investor-supplied capital, which has an after-tax cost of 12.5%. If Jackson Tiress tax rate is 40%, how much value did its management create or lose for the firm during the year (rounded to the nearest whole dollar)?

$20,662,500

$2,962,500

$18,562,500

$814,688