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A company has a net EBIT of EUR1bn and has a capital employed (CE) of 10bn EUR. The weighted average cost of capital (WACC) is
A company has a net EBIT of EUR1bn and has a capital employed (CE) of 10bn EUR. The weighted average cost of capital (WACC) is 12%.
- Define whether this creates or destroys value.
- Determine the amount of value created or destroyed.
- How would you explain to the managers of this company that generates EUR1bn of net EBIT that they are destroying value.
- What are the driver for this company to create value?
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