The companys cost of capital is 8.5%.

a. Calculate Watervans economic value added (EVA).

b. What is the companys return on capital? (Use start-of-year rather than average capital.)

c. What is its return on equity? (Use start-of-year rather than average equity.)

d. Is the company creating value for its shareholders?

3. Measuring Performance. Here are simplified financial statements for Watervan Corporation: \begin{tabular}{|lr|} \hline \multicolumn{1}{|c|}{INCOMESTATEMENT(Figuresin$millions)} \\ \hline Net sales & $881 \\ Cost of goods sold & 741 \\ Depreciation & 31 \\ Earnings before interest and taxes (EBIT) & 109 \\ Interest expense & 12 \\ Income before tax & 97 \\ Taxes & 20 \\ Net income & 77 \\ \hline \end{tabular}