A.What is economic value added (EVA) and what are the different ways of calculating EVA? B. Why can. 1 answer below »
- March 08, 2021/ Questions
A.What is economic value added (EVA) and what are the different ways of calculating EVA? B. Why can EVA serve as a foundation for an integrated financial management system? C. What considerations should you bear in mind, as you look at various approaches to value enhancement? D. The balance sheet of International Computers Limited (ICL) at the end of 20X0 is given below. ICL’s equity has a beta of 0.9. The risk free return is 6 percent and the market risk premium is 6 percent. The interest rate on ICL’s debt is 8 percent. The tax rate for ICL is 35 percent. Answer the following questions: (a) What is the invested capital at the beginning of 20X1? (b) What is the NOPAT for 20X1? (c) What is the return on invested capital for 20X1? (d) What is the cost of equity? (e) What is the average cost of capital? (f) What is the EVA for 20X1? E. The following information is available for Adarsh Corporation: • ROIC = 14 percent • WACC = 12 percent • Invested capital = 2000 million • Constant growth rate = 10 percent What is the MVA of Adarsh Corporation? What will happen to MVA, if the constant growth rate falls to 8 percent?