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3. Quantitative Problem: Rosnan Industries' 2013 and 2012 balance sheets and income statements are shown below....

3.

Quantitative Problem: Rosnan Industries' 2013 and 2012 balance sheets and income statements are shown below.

Balance Sheets:
2013 2012
Cash and equivalents $100   $85  
Accounts receivable 275   200  
Inventories 375   250  
      Total current assets $750   $635  
Net plant and equipment 2,000   1,490  
Total assets $2,750   $2,125  
Accounts payable $150   $85  
Accruals 75   50  
Notes payable 150   75  
      Total current liabilities $375   $210  
Long-term debt 450   290  
Common stock 1,225   1,225  
Retained earnings 700   400  
Total liabilities and equity $2,750   $2,125  


Income Statements:
2013 2012
Sales $2,000   $1,500  
Operating costs excluding depreciation 1,250   1,000  
EBITDA $750   $500  
Depreciation and amortization 100   75  
EBIT $650   $425  
Interest 62   45  
EBT $588   $380  
Taxes (40%) 235   152  
Net income $353   $228  
Dividends paid $53   $48  
Addition to retained earnings $300   $180  
Shares outstanding 160    160   
Price $ 27.78    $ 25.28   
WACC 9.00 %     


Using the financial statements above, what is Rosnan's 2013 market value added (MVA)? Round your answer to the nearest dollar. Do not round intermediate calculations.

Using the financial statements given earlier, what is Rosnan's 2013 economic value added (EVA)? Round your answer to the nearest cent. Do not round intermediate calculations.

Solutions

Expert Solution

Please refer to below spreadsheet for calculation and answer. Cell reference also provided.

Cell reference -

Hope this will help, please do comment if you need any further explanation. Your feedback would be appreciated.

jeff jeffy answered 4 months ago
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