Calculate the required return $($weighted average cost of capital$)$

Market Weights Component Weighted

Values Cost Cost

Debt $$3,0990\mathrm{.}36\%$

Equity $$853,29999\mathrm{.}64\%$

$$856,398$

Required return $($weighted average cost of capital$)......................................$

Calculate the Economic Profit $($Economic Value Added$)$

Year $20162017201820192020202120222023$

Net Operating Assets $$19,747$ $$24,940$ $$24,963$ $$28,447$ $$43,283$ $$47,803$ $$61,530$ $$85,764$

times the required return

Required income in dollars

Year $20162017201820192020202120222023$

Operating Income earned $$(667)$ $$(1,632)$ $$(387)$ $$(69)$ $$1,994$ $$6,523$ $$13,632$ $$13,632$

Less required income

Economic profit or $($loss$)$

Another way to look at this:

Return on invested capital

Weighted average cost of capital

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