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Anahara Co. reported these data at year-end: Pre-tax operating income Current assets Long-term assets Current liabilities Long-term liabilities $ 4.000.000 4.000.000 16.000.000 2.000.000 5.000.000
Anahara Co. reported these data at year-end: Pre-tax operating income Current assets Long-term assets Current liabilities Long-term liabilities $ 4.000.000 4.000.000 16.000.000 2.000.000 5.000.000 The long-term debt has an interest rate of 8%, and its value equaled its book value at year- end. The fair value of the equity capital is $2 million greater than its book value. Anahara's tax rate is 25% and its cost of equity capital is 10%. Required: 1. Please calculate the weighted-average cost of capital (WACC) to be used in the economic value added (EVA) calculation. 2. Please calculate the economic value added (EVA) for this year.
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