For the fiscal year ending January 31, 2012, Targets EBIT was $5,322,* and its tax rate was 34.3 percent. Its short-term borrowings were $3,786, and its long-term debt was $13,697. In addition, the firms book value of equity was $15,821.

For the fiscal year ending January 31, 2012 (2011), Target had total revenues of (in millions) $69,865 ($67,390) and net earnings of $2,929 ($2,920). Its total assets were $46,630 ($43,705) and its equity was $15,821 ($15,487).

According to its annual report, as of January 31, 2012, Targets borrowing costs averaged 4.6 percent, and its tax rate was 34.27 percent. A research report estimated Targets cost of capital at 10.5 percent. The firm had interest-bearing debt of $17,483. Moreover, Targets stock was trading at $50.81 per share, and there were 679.1 million shares outstanding. Now, lets assume Targets amount of debt is also a market value estimate of the debt. Lets also assume the current debt and equity values are at Targets optimal capital structure.

Target Corporation: EVA

Earlier, you were provided with the information necessary to estimate Targets operating profit (EBIT) after-tax, also known as NOPAT; invested capital (the book value of equity plus interest-bearing debt); cost of capital; and market value of equity. Based on this information,

1.Estimate Targets EVA for the year that ended on January 31, 2012.

2.Was Target adding value?

3.Did Target have a positive market value added or MVA?

4.How did Targets EVA and MVA compare with Walmarts EVA and MVA?