Chapter 19, Problem 16PS

Summary Introduction

(A)

Adequate information:

Firm Name	Equity ($ million)	Debt ($ million)	ROC (%)	Cost of Capital (%)
ACME	100	50	17	9
APEX	450	150	15	10

To Compute:

Economic Value Added of the Firms

Introduction:

Economic Value Added (EVA) is the incremental difference in the rate of the return on investment over the Cost of the Capital investment of the Company

Summary Introduction

(B)

To Compute:

EVA per dollar of invested capital of the Firms