CLAD Corp Inc. reported the following: Sales $15,000 Op Costs (including depreciation) $6,000 Op Income (EBIT)...

CLAD Corp Inc. reported the following:
Sales	$15,000
Op Costs (including depreciation)	$6,000
Op Income (EBIT)	$9,000

WACC	10.00%
Tax Rate	40%
Investor-supplied capital	$20,000

What is the Economic Value Added (EVA)?

Expert Solution

Formula for Economic Value Added(EVA) = NOPAT - (WACC*Capital Invested)

Given:

EBIT = 9000

Tax = 40%

NOPAT = EBIT*(1 - Tax rate)

NOPAT = 9000*(1 - 0.4) = 5400

WACC = 10%

Capital Invested = 20000

So, putting the values in EVA formula,

EVA = 5400 - (0.1*20000)

EVA = 5400 - 2000

EVA = 3400

So, Economic Value Added(EVA) = $3400

jeff jeffy answered 2 years ago

Sugar Land Inc. recently reported $15,000 of sales, $7,500 of operating costs other than depreciation, and...

Sugar Land Inc. recently reported $15,000 of sales, $7,500 of operating costs other than depreciation, and $1,200 of depreciation. The company had no amortization charges, it had outstanding $6,500 of bonds that carry a 6.25% interest rate, and its federal-plus-state income tax rate was 35%. How much was the firm's net income after taxes? a. $3,284.55 b.$3,457.42 c.$3,639.39 d.$3,830.94 e.$4,022.48

1) Wick Inc., has sales of $889,095.00, operating costs (not including depreciation) of $320,074.20, depreciation expense...

1) Wick Inc., has sales of $889,095.00, operating costs (not including depreciation) of $320,074.20, depreciation expense of $124,473.30, interest expense of $62,236.65, and a tax rate of 38.00%. What is the net income for this firm? a. $237,032.73 b. $237,032.73 c. $145,278.12 d. $168,928.05 2)Given the following Financial Information Answer the following question: 2017 2018 Cash 3,000 461,305 Accounts Receivable 9,000 9,900 Inventory 5,000 5,500 Prepaid Assets 3,000 3,300 Other Assets 5,000 5,500 Total Current Assets 25,000 485,505 Net PPE...

XYZ Corp recently reported $8,000 of sales, $5,750 of operating costs other than depreciation, and $700...

XYZ Corp recently reported $8,000 of sales, $5,750 of operating costs other than depreciation, and $700 of depreciation. The company had no amortization charges, it had $3,000 of outstanding bonds that carry a 6% interest rate, and its federal-plus-state income tax rate was 30%. In order to sustain its operations and thus generate sales and cash flows in the future, the firm was required to make $1,250 of capital expenditures on new fixed assets and to invest $300 in net...

Question: Based on the following transactions, complete this income statement: Sales: Operating Expense: Depreciation Expense: EBIT:...

Question: Based on the following transactions, complete this income statement: Sales: Operating Expense: Depreciation Expense: EBIT: Intresrest Expense: Pre-tax Income: Taxes: Net Income: Dividened: Paid to Retained Earning: 1. Earn $85,000 in sales revenue: $40,000 into Accounts Receivable and $45,000 in cash. 2. The sales require $50,000 worth of existing inventory. $20,000 of additional inventory is purchased on credit and applied to the Accounts Payable. 3. $30,000 is collected from Accounts Recievable. 4. $35,000 of the Accounts Payable is due...

The Redding Co has sales of $116,097, operating costs of $68,608, depreciation of $15,000, and debt of...

The Redding Co has sales of $116,097, operating costs of $68,608, depreciation of $15,000, and debt of $9,000 for which it pays 8% interest. If it is paying taxes at 35% what is its net income?

Boston Inc. recently reported $125,000 of sales, $75,500 of operating costs other than depreciation, and $10,200...

Boston Inc. recently reported $125,000 of sales, $75,500 of operating costs other than depreciation, and $10,200 of depreciation. The company had $16,500 of outstanding bonds that carry a 7.25% interest rate, and its federal-plus-state income tax rate was 40%. How much was the firm's net income? The firm uses the same depreciation expense for tax and stockholder reporting purposes. (Round your intermediate and final answers to two decimal places.)

1. Test Company reported the following income statement for the most recent period. Sales (6,000 units)...

1. Test Company reported the following income statement for the most recent period. Sales (6,000 units) $120,000 Variable expenses 72,000 Contribution margin 48,000 Fixed expenses 30,000 Operating income $18,000 Determine the breakeven point in units. Note: Give your answer using commas. Do not include the word “units.” Example: 12,345 2. Determine the number of units Test Company must sell to earn operating income of $20,000. Note: Give your answer using commas. Do not include the word “units.” 3....

Last year, Stewart-Stern Inc. reported $11,250 of sales, $4,500 of operating costs other than depreciation, and...

Last year, Stewart-Stern Inc. reported $11,250 of sales, $4,500 of operating costs other than depreciation, and $1,250 of depreciation. The company had $3,500 of bonds outstanding that carry a 6.50% interest rate, and its federal-plus-state income tax rate was 35.00%. During last year, the firm had expenditures on fixed assets and net operating working capital that totaled $2,000. These expenditures were necessary for it to sustain operations and generate future sales and cash flows. This year's data are expected to...

Sales $3,000,000 Operating costs (excluding depreciation) 1,500,000 Gross margin $1,500,000 Depreciation 500,000 EBIT $1,000,000 Interest 500,000...

Sales $3,000,000 Operating costs (excluding depreciation) 1,500,000 Gross margin $1,500,000 Depreciation 500,000 EBIT $1,000,000 Interest 500,000 EBT $500,000 Taxes 200,000 Net income $ 300,000 The company’s president is disappointed with the forecast and would like to see the company generate higher sales and a forecasted net income of $750,000. Assume that the president wants to maintain the same proportion of operating costs (excluding depreciation). Also, assume that depreciation and the company’s tax rate will remain the same. The president wants...

You are given the following information for 1994: Sales = $50,000, CoG’s = $15,000, Depreciation =...

You are given the following information for 1994: Sales = $50,000, CoG’s = $15,000, Depreciation = $5000, tax rate = 40%, Net Capital Spending = $15,000, Additions to Net Working Capital = $5000. Calculate EBIT, OCF, and CFA. Do you have to be worried if the CFA is negative? Explain.

Question