You have been asked by an investor to compute for the Economic Value Added of the companies he is considering to invest into as follows:    E V A Net Investment 55,000,000 60,000,000 70,000,000 WACC 8% 9% 10% Net Income after Tax 3,510,000 2,750,000 5,230,0000 Net Operating Income After Tax 4,550,000 5,450,000 6,850,000   Which Company under consideration has the highest EVA Which companies would you recommend for investment, Why? What is the EVA of each companies under consideration?

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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  1. You have been asked by an investor to compute for the Economic Value Added of the companies he is considering to invest into as follows: 

 

E

V

A

Net Investment

55,000,000

60,000,000

70,000,000

WACC

8%

9%

10%

Net Income after Tax

3,510,000

2,750,000

5,230,0000

Net Operating Income After Tax

4,550,000

5,450,000

6,850,000

 

  1. Which Company under consideration has the highest EVA
  2. Which companies would you recommend for investment, Why?
  3. What is the EVA of each companies under consideration?
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