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    The Beast 408's Avatar
    The Beast 408 Posts: 2, Reputation: 1
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    #1

    Aug 20, 2009, 09:39 AM
    Econominc value added
    Hello,

    I'm not looking for the answer to be given to me I am just looking for guidance on how to figure out this problem... could someone guide me in the right direction?

    A company has a weighted average cost of capital of 12%, sales of $30,000, a profit margin of 16%, and an income tax rate of 30%. If the firm's total invested capital at the beginning of the year was $9,818, what is the Economic Value Added (EVA)?
    The Beast 408's Avatar
    The Beast 408 Posts: 2, Reputation: 1
    New Member
    		  
    #2

    Aug 20, 2009, 09:49 AM

    I have found this, is this correct:

    Net operating profit after tax - (weighted avg cost of capital x invested capital)= EVA
    ArcSine's Avatar
    ArcSine Posts: 969, Reputation: 106
    Senior Member
    		  
    #3

    Aug 20, 2009, 10:07 AM
    Yep, that's one of the common ways of expressing EVA. Good job... the boys at Stern Stewart would be proud.
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