Exercise 2: The Chief Executive of the Serwa Oil ltd, has just returned from a management seminar in which the benefits of economic value added have been trumpeted. He wants to know what the calculation would be for Serwa Oil, and asks his financial analyst to find out. The financial analyst knows that the company's cost of capital is 12.5%, having recently calculated it from the company's mix of debt, preferred stock and common stock. He then reconfigures information from the income statement and the statement of financial position into the following matrix, where some expense line items are instead treated as investments. Required: a) Return on Investment for Serwa ltd. b) Calculate the Economic Value Added for Serwa ltd. c) What are the challenges to implementing EVA in an oil and gas Company