Fin 301-02 (Fall 2018) Homework: Chapter 4 Homework Score: 0 of 2 pts Problem 4-

Question

Fin 301-02 (Fall 2018) Homework: Chapter 4 Homework Score: 0 of 2 pts Problem 4-12 (similar to) (Economic Value Added) K. Johnson, Inc's MN Score: 25%, 9 of 36 pts Help want to evaluate the firm's prior-year performance in terms of ts retum on ievestment of 13 percent capital. The fiem's total assets for the year were $300 million. Compute raio analysis to evaluate the frms the amount ofeconomic value created or destroyed by the firm How does your ning support orfaatospport what you would ndude using value created or e? Assume that the mm has no debl million (Round to one decimal place.) 0

Explanation / Answer

The formula for EVA is:

NOPAT - (Capex x WACC)

We have NOPAT here = 13% x 300 million = $39 million

Therefore, EVA = $39 million - (300m x 16%)

= $39 m - 448 m

=($9 million)

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