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Compute the economic value added

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Reference no: EM131115256

XYZ Company's net operating profit before taxes is $180 million. The tax rate is 30%. XYZ's total assets (invested capital) are $1,000 million, and current liabilities are $100 million. The weighted average cost of capital (WACC) is 14%.

Required:

Compute the economic value added (EVA).

To do that, first compute NOPAT = $1 million (if you get say $55.4million, enter 55.4, not 55,400,000) After that, compute EVA = $2 million (If you get a negative number, enter it with a minus sign. E.g., if you got negative $3.25 million, enter -3.25)

Reference no: EM131115256

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