Final answer:
Without the necessary financial statements, we cannot calculate Watervan's Economic Value Added (EVA) exactly. However, as long as the company's Net Operating Profit After Taxes (NOPAT) is greater than the cost of capital multiplied by the capital employed, the company would be creating value for its shareholders.
Step-by-step explanation:
To calculate Watervan's Economic Value Added (EVA), we need to follow these steps:
- Determine the Net Operating Profit After Taxes (NOPAT), which is not provided in the question, but traditionally calculated as ((Revenue - Operating Costs - Depreciation)(1 - Tax Rate)).
- Calculate the capital employed, which is typically Total Assets minus Current Liabilities. Unfortunately, this information is also not provided in the question.
- Apply the formula EVA = NOPAT - (Weighted Average Cost of Capital * Capital Employed).
Since key financial statements are missing in the provided data, we cannot compute the EVA exactly. However, the company's cost of capital is given as 8.5%. If the NOPAT exceeds the cost of capital (8.5% of Capital Employed), the company is creating value. To find out if Watervan is creating value for its shareholders without the required financial data, we would need Watervan's NOPAT and the amount of capital employed.
The information you have provided about accounting and economic profit is not directly applicable to the EVA calculation but illustrates different ways of understanding profitability. As for investing based on expected rates of return and societal benefit, it shows a decision-making process where a firm might invest when the effective rate of return meets or exceeds the cost of financial capital.