Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Please help me to solve this . Please please a) Economic Value Added (EVA) or Economic Profit is a measure based on the Residual Income

Please help me to solve this . Please please

image text in transcribed

a) Economic Value Added (EVA) or Economic Profit is a measure based on the Residual Income technique that serves as an indicator of the profitability of projects undertaken. Its underlying premise consists of the idea that real profitability occurs when additional wealth is created for shareholders and that projects should create returns above their cost of capital. Based on the information given below appraise the company's projected EVA. 2020 S Sales Expenses Other than Interest Depreciation Earnings before interest and taxes (EBIT) Taxes on EBIT@40% Earnings before interest and after taxeset operating profits after tax (NOPAT) Current assets less excess cash and securities 500 Non-interest bearing current liabilities -100 Adjusted networking capital(current asset-current 300 liabilities) Gross, property, plant and equipment (Fixed asset) 3300 Accumulated depreciation (deduct) -1000 2021 $ 2100 -500 -300 1300 -520 780 480 -120 360 3600 1300 2300 Net property, plant and equipment 2300 Invested capital 2600 2660 a) Economic Value Added (EVA) or Economic Profit is a measure based on the Residual Income technique that serves as an indicator of the profitability of projects undertaken. Its underlying premise consists of the idea that real profitability occurs when additional wealth is created for shareholders and that projects should create returns above their cost of capital. Based on the information given below appraise the company's projected EVA. 2020 S Sales Expenses Other than Interest Depreciation Earnings before interest and taxes (EBIT) Taxes on EBIT@40% Earnings before interest and after taxeset operating profits after tax (NOPAT) Current assets less excess cash and securities 500 Non-interest bearing current liabilities -100 Adjusted networking capital(current asset-current 300 liabilities) Gross, property, plant and equipment (Fixed asset) 3300 Accumulated depreciation (deduct) -1000 2021 $ 2100 -500 -300 1300 -520 780 480 -120 360 3600 1300 2300 Net property, plant and equipment 2300 Invested capital 2600 2660

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Fundamentals of Financial Management

Authors: Eugene F. Brigham, Joel F. Houston

Concise 6th Edition

324664559, 978-0324664553

More Books

Students also viewed these Finance questions