***PLEASE SHOW STEPS!!! (EVA) XYZ Company\'s net operating profit before taxes i
ID: 2460920 • Letter: #
Question
***PLEASE SHOW STEPS!!!
(EVA)
XYZ Company's net operating profit before taxes is $100 million. The tax rate is 45%. XYZ's total assets (invested capital) are $1,000 million, and current liabilities are $130 million. The weighted average cost of capital (WACC) is 10%.
Required:
Compute the economic value added (EVA).
To do that, first compute NOPAT = $________million (if you get say $55.4million, enter 55.4, not 55,400,000)
After that, compute EVA = $_______ million (If you get a negative number, enter it with a minus sign. E.g., if you got negative $3.25 million, enter -3.25)
Explanation / Answer
EVA = Net operating after tax - (WACC * Cost of capital)
Capital invested = $ 1,000 million
WACC = 10 %
EVA = 55 - (1000*10%)
= -45 million
Net operating before tax 100 Less Tax 45 Net operating after tax 55Related Questions
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