Question
PLEASE SHOW YOUR WORK AND FORMULAS SO I CAN BETTER LEARN THIS MATERIAL. Quantitative Problem: Rosnan Industries' 2017 and 2016 balance sheets and income statements
PLEASE SHOW YOUR WORK AND FORMULAS SO I CAN BETTER LEARN THIS MATERIAL.
Quantitative Problem: Rosnan Industries' 2017 and 2016 balance sheets and income statements are shown below. All of the balance of Cash and Equivalents is an operating asset.
Balance Sheets: | |||
2017 | 2016 | ||
Cash and equivalents | $100 | $85 | |
Accounts receivable | 275 | 200 | |
Inventories | 375 | 250 | |
Total current assets | $750 | $635 | |
Net plant and equipment | 2,000 | 1,490 | |
Total assets | $2,750 | $2,125 | |
Accounts payable | $150 | $85 | |
Accruals | 75 | 50 | |
Notes payable | 150 | 75 | |
Total current liabilities | $375 | $210 | |
Long-term debt | 450 | 290 | |
Common stock | 1,225 | 1,225 | |
Retained earnings | 700 | 400 | |
Total liabilities and equity | $2,750 | $2,125 |
Income Statements: | |||
2017 | 2016 | ||
Sales | $2,000 | $1,500 | |
Operating costs excluding depreciation | 1,250 | 1,000 | |
EBITDA | $750 | $500 | |
Depreciation and amortization | 100 | 75 | |
EBIT | $650 | $425 | |
Interest | 62 | 45 | |
EBT | $588 | $380 | |
Taxes (40%) | 235 | 152 | |
Net income | $353 | $228 | |
Dividends paid | $53 | $48 | |
Addition to retained earnings | $300 | $180 | |
Shares outstanding | 100 | 100 | |
Price | $31.25 | $28.75 | |
WACC | 8.00% |
Using the financial statements above, what is Rosnan's 2017 market value added (MVA)? Round your answer to the nearest dollar. Do not round intermediate calculations. $____
Using the financial statements given earlier, what is Rosnan's 2017 economic value added (EVA)? Round your answer to the nearest cent. Do not round intermediate calculations. $____
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