JigmetSessionLocator assignment-take&inprogress-false; a calculator Economic Val

Question

JigmetSessionLocator assignment-take&inprogress-false; a calculator Economic Value Added Falconer Company had net (after-tax) income last year of $13,365,432 and total capital employed of $127,39, 560. Falconer's actual cost of was 11%. Required: 1. Calculate the EVA for Falconer Company. Enter negative values as negative numbers, f required. Round your answer to the nearest dolla 2. Conceptual Connection: Is Faiconer creating or destroying wealth? Falconer is destroying wealth V eedb ok Check My Work 1. EVA - Ater Tex operating Income -CActual Percentage Cost of Capitatk Total Capital Employed) 2. Ir EVA is peanve. then the company has noreased its wetn during the perod its wealth during the period then the company has increased its wealth during the period. If EVA is negative, and then the company has decreased PreviousNe Check My Work

Explanation / Answer

Answer:

1

EVA

=net operating income after tax-(capital employed *WACC)

=13,365,432-127,399,560*11%

=13,365,432-14,013,952

=$(648,520) negative

SO EVA=$(648,520)

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2

Here we can see that EVA is negative company is destroying wealth

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