Question

BVN Inc. had the following data for the year Indian 1231 EBIT equals 700 total assets equal 2500 corporate tax rate is 40% BBN weighted average cost of capital WACC comp was 12%. What was its economic value added the EVA

Answer 1

To calculate EVA, subtract economic profit from total capital employed. Given the values, EVA for BVN Inc. is 400.

Step-by-step explanation:

To calculate Economic Value Added (EVA), you need to subtract the company's economic profit from the total capital employed. Economic profit is calculated by subtracting the total cost of capital from the company's earnings before interest and taxes (EBIT). In this case, the EBIT is 700, and the total assets are 2500.

First, calculate the total cost of capital by multiplying the total assets by the weighted average cost of capital (WACC): 2500 * 0.12 = 300.

Next, subtract the total cost of capital from the EBIT: 700 - 300 = 400. Therefore, the Economic Value Added (EVA) for BVN Inc. is 400.