Question
Use the companys financial data to answer the questions. Profit and Loss Account for Year ending Dec 31 (in millions) 2015 2014 Sales 1 1,000
Use the companys financial data to answer the questions.
Profit and Loss Account for Year ending Dec 31 (in millions) |
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| 2015 | 2014 |
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Sales | 11,000 | 10,000 |
Operating costs excluding depreciation | 9,360 | 8,500 |
Depreciation | 380 | 360 |
Earnings before interest and taxes | 1,260 | 1,140 |
Less: Interest | 120 | 100 |
Earnings before taxes | 1,140 | 1,040 |
Taxes (40%) | 456 | 416 |
Net income | 648 | 624 |
Common dividends | 220 | 200 |
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Balance Sheets as of Dec 31 (in millions) |
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| 2015 | 2014 |
ASSETS |
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Cash | 550 | 500 |
Short-term investments | 110 | 100 |
Accounts receivable | 2,750 | 2,500 |
Inventories | 1,650 | 1,500 |
Total current assets | 5,060 | 4,600 |
Net plant and equipment | 3,850 | 3,500 |
Total assets | 8,910 | 8,100 |
LIABILITIES AND EQUITY |
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Accounts payable | 1,100 | 1,000 |
Accruals | 550 | 500 |
Notes payable | 384 | 200 |
Total current liabilities | 2,034 | 1,700 |
Long-term debt | 1,100 | 1,000 |
Total liabilities | 3,134 | 2,700 |
Common stock | 4,312 | 4,400 |
Retained earnings | 1,464 | 1,000 |
Total common equity | 5,776 | 5,400 |
Total liabilities and equity | 8,910 | 8,100 |
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7) Assume that the after-tax cost of funds is 14%. What is the economic value added for 2015?
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