In your internship, the financial manager of "ABC" firm, specialized in production and commercialization of car batteries, asks you to evaluate whether the firm creates value to its shareholders. The cost of capital is 10%. Sales $700,000; Cost of Goods Sold (COGS) $250,000; SG&A Expenses $10,000; Depreciation $50,000; Other Operating Expenses $10,000%3; Financial charges $2,000. The total invested capital is $750,000. Corporate Tax rate is 40%. 1- Calculate the net operating profit after taxes (NOPAT) 2- Calculate the company's Economic value added (EVA). Interpret. 3- If the future EVAS are expected to grow at a constant growth rate 12% for the next three years, calculate the market value added (MVA). Interpret.
In your internship, the financial manager of "ABC" firm, specialized in production and commercialization of car batteries, asks you to evaluate whether the firm creates value to its shareholders. The cost of capital is 10%. Sales $700,000; Cost of Goods Sold (COGS) $250,000; SG&A Expenses $10,000; Depreciation $50,000; Other Operating Expenses $10,000%3; Financial charges $2,000. The total invested capital is $750,000. Corporate Tax rate is 40%. 1- Calculate the net operating profit after taxes (NOPAT) 2- Calculate the company's Economic value added (EVA). Interpret. 3- If the future EVAS are expected to grow at a constant growth rate 12% for the next three years, calculate the market value added (MVA). Interpret.
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Transcribed Image Text:In your internship, the financial manager of "ABC" firm, specialized in production and commercialization of car batteries, asks you to evaluate whether the
firm creates value to its shareholders.
The cost of capital is 10%.
Sales $700,000; Cost of Goods Sold (COGS) $250,000; SG&A Expenses $10,000; Depreciation $50,000; Other Operating Expenses $10,000; Financial
charges $2,000. The total invested capital is $ 750,000. Corporate Tax rate is 40%.
1- Calculate the net operating profit after taxes (NOPAT)
2- Calculate the company's Economic value added (EVA). Interpret.
3- If the future EVAS are expected to grow at a constant growth rate 12% for the next three years, calculate the market value added (MVA). Interpret.
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