El Suezo Inc. had sales of $5,000,000, cost of goods sold of $3,500,000, and selling and administrative expense of $500,000 for its most recent year of operations. El Suezo faces a tax rate of 40%. Also, El Suezo employed $2,000,000 of debt capital and $4,000,000 of equity capital in generating its return. Finally, the companys actual cost of capital is 8%.

a. Calculate after-tax operating income of El Suezo. (20 marks)

b. Calculate economic value added for El Suezo. (10 marks)