Question
One of High Risk Uniteds divisions has above average risk and so a divisional weighted average cost of capital of 22%. This division has current
One of High Risk Uniteds divisions has above average risk and so a divisional weighted average cost of capital of 22%. This division has current sales of $795,000, operating income of $325,000, total net operating capital of $395,000, and a marginal tax rate of 25%. What is the Market Value Added (MVA) for this division if the constant growth FCF model applies and the division expects a constant growth in sales and FCFs of 8%? Enter your answer rounded to two decimal places. Do not enter $ or comma in the answer box. For example, if your answer is $12,300.456 then enter as 12300.46 in the answer box.
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