Exercise 1

In 2011 Company XYZ had sales of 345,620million, net operating profit after taxes of 10,250 million, and employed $62,650 million in debt and equity capital. Company XYZ cost of capital was 6.5%. What was XYZ EVA in 2011?

Exercise 2

Company XYZ has the following demand function

P= 100 - 0.0002Q

Its marginal revenue function was

MR = 100 - 0.004Q

a. Find the firm's Total Revenue Function

b. Calculate the output level and price that maximizes total revenue.

c. Calculate the amount of revenues in dollars.

Exercise 3

Company XYZ expected after tax profits are represented in the following table at an expected discount rate of 10%. Calculate the expected value of the firm XYZ:

YEAR / EXPECTED PROFTIS AFTER TAX (KUSD)

2008 / 150

2009 / 180

2010 / 200

2011 / 230