Accounting

Question 3 Lumber corporation is a private company and the managers want to know how much of economic value has been added during the current year . So they decided to use EVA to measure the nancial performance . The company provided the management accountant department with the following nancial data found in the table below: Current liabilities Current Assets Long term liabilities [Bond Payable] Equity Research & develoment Training expenses Tax rate Net income Sales O D '. m Interest -aid on debt Risk free rate 6% Risk premium 6.5% Assume that current liabilities are no: interest bearing obligation Cost of i r ' 5-: eminent baud rate + risk ram 1. Calculate tax, interest expense and EBIT (operating income) 2. Calculate the EBIT after tax. 3. Calculate the total assets. 4. Calculate working capital employed {WCE}. 5. What is the WACC of the company? 6. Calculate the economic value added [EVA] 7. What will happen if a company has negative EVA for a while