Question

Calculate the economic value added (eva) and market value added (mva) for bbcc, assuming that the firm’s income tax rate is 40 percent, the weighted average rate of return expected by the suppliers of the firm’s capital is 10 percent, and the market price of the firm’s stock is $20. there are 1.2 million shares outstanding.

Answer 1

To calculate the Economic Value Added (EVA) and Market Value Added (MVA) for BBCC, subtract the cost of capital from the firm's net operating profit after tax (NOPAT) for EVA, and subtract the total capital from the product of the market price per share and the number of shares for MVA.

Step-by-step explanation:

To calculate the Economic Value Added (EVA) and Market Value Added (MVA) for BBCC, we need to follow these steps:

1. Calculate EVA by subtracting the firm's cost of capital from its net operating profit after tax (NOPAT). EVA = NOPAT - (Capital * Cost of Capital).

2. Calculate MVA by multiplying the market price per share by the number of shares outstanding and subtracting the firm's total capital. MVA = (Market Price per Share * Number of Shares) - Total Capital.

Using the given information, let's calculate EVA and MVA:

EVA = $102 million - (Capital * 10%)

MVA = ($20 * 1.2 million) - Capital

Please note that the capital value is missing from the given information, so it's not possible to calculate the exact EVA and MVA without that information.