Reference no: EM132783027

Here are simplified financial statements for Watervan Corporation:

INCOME STATEMENT(Figures in $ millions)

Net sales$894.00

Cost of goods sold 754.00

Depreciation 44.00

Earnings before interest and taxes (EBIT)$96.00

Interest expense 25.00

Income before tax$71.00

Taxes 14.91

Net income$56.09

BALANCE SHEET(Figures in $ millions)

End of Year Start of Year

Assets

Current assets $382 $338

Long-term assets 284 235

Total assets $666 $573

Liabilities and shareholders' equity

Current liabilities $207 $170

Long-term debt 121 134

Shareholders' equity 338 269

Total liabilities and shareholders' equity $666 $573

The company's cost of capital is 8.5%.

a. Calculate Watervan's economic value added (EVA). (Do not round intermediate calculations. Enter your answer in millions rounded to 2 decimal places.)

b. What is the company's return on capital? (Use start-of-year rather than average capital.) (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)

c. What is its return on equity? (Use start-of-year rather than average equity.) (Enter your answer as a percent rounded to 2 decimal places.)