What is the economic value added

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Question: Assume Avionics Industries reported at year-end that operating income before taxes for the year equaled $2,400,000. Long-term debt issued by Avionics has a coupon rate equal to 6%, and its cost of equity is 8%. The book value of the debt currently equals its fair value, and the book value of the equity capital for Avionics is $900,000 less than its fair value. Current assets are listed at $2,000,000 and long-term assets equal $9,600,000. The claims against those assets are in the form of $1,500,000 in current liabilities and $2,200,000 in long-term liabilities. The income tax rate for Avionics is 30%. What is the economic value added (EVA)?

Reference no: EM132742491

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