The following income statements and other information are available for the schn
ID: 2471545 • Letter: T
Question
The following income statements and other information are available for the schneider company: Calculate EVA for 2014. Assume that for purposes of calculating EVA, the company capitalizes research and development expenditures and amortizes them over three years, including the year they are incurred. For external reporting purposes, research and development is expensed in the year incurred, as indicated in the income statements above. (Round answer to the nearest whole dollar, e.g. 5,725.) EVA for 2014Explanation / Answer
Economic Value Added = Net investment x (Actual return on investment – Percentage cost of capital)
= $715,200,000 * ($89,559,400/715,200,000 - 12%)
= $3,735,400
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