10. HHH Inc. reported $12,500 of sales and $7,025 of operating costs (including depreciation). The company had $18,750 of investor-supplied operating assets (or capital), the weighted average cost of that capital (the WACC) was 9.5%, and the federal-plus-state income tax rate was 40%. What was HHH's Economic Value Added (EVA), i.e., how much value did management add to stockholders' wealth during the year?

Respuesta :

Answer:

Explanation:

Economic value added=NOPAT-(CAPITAL * WACC)

NOPAT=(SALE - OPERATING COST)(1-TAX SALE)

=($12500 - $7025)(1 - 0.40)

-5475*0.60

=$3285

EVA = $3285 - (18750 * 9.5%)

= $3285 - %1781.25

=$1503.75