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Asher, your newly appointed boss, has tasked you with evaluating the following financial data for Water and Power Co. to determine how Water & Power's

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Asher, your newly appointed boss, has tasked you with evaluating the following financial data for Water and Power Co. to determine how Water & Power's value has changed over the past year. The investment firm for which you work will make a positive (or "buy") recommendation to its investing clients if Water & Power's value has increased over the past year, a neutral (or "hold") recommendation if the value has remained constant, or a negative (or "sell") recommendation if the value has decreased. He has recommended that you use several metrics to ascertain how the firm's value has changed, and he has provided you with the following income statement and balance sheet. Income Statement January 1 - December 31, Year 2 Balance Sheet December 31, Year 2 To facilitate your analysis, complete the following table, and use the results to answer the related questions. (Note: Round all percentage change answers to two decimal places. If a dollar value is below $100, round your answer to two decimal places. If your answer is negative use a minus ( ) sign.) Using the change in Water \& Power's. EVA as the decision criterion, which type of investment recommendation should you make to your clients? A sell recommendation A buy recommendation A hold recommendation Which of the following statements are correct? Check all that apply. Water \& Power's NCF is calculated by adding its annual depreciation and amortization expense to the corresponding year's EBITDA. For any given year, one way to compute Water \& Power's EVA is as the difference between its NOPAT and the product of its operating capital and its weighted average cost of capital. The percentage change in Water \& Power's MVA indicates that its management has increased the firm's value. An increase in the number of common shares outstanding must increase the market value of the firm's equity. The percentage change in Water 8 Power's EVA indicates that management has increased its value

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Finance For Managers

Authors: Harvard Business School Press

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