What is its economic value added

Assignment Help Financial Management
Reference no: EM131010950

Spencer Inc has the following information for the current year: Net income=$600; Net operating profit after taxes (NOPAT) = $600; Total assests = $4,000; short term investments = $500; stockholders equity =$2000; debt=$1000; and total net operating capital =$2500. If spencer's cost of capital is $10%, what is its Economic value added (EVA)?

Reference no: EM131010950

Questions Cloud

Based on an annual effective interest rate : Jia received $12,000 from a lottery. She uses this money to purchase two different annuities, each costing $6,000. The first annuity is a 24-year annuity-immediate paying $K per year, and the second is an 8-year annuity-immediate paying $2K per year...
Describe the unique oceanographic characteristics : For this assignment, you will choose an interesting place on Earth and describe the unique oceanographic characteristics of that location
What is the trend in the global oil prices : What is the trend in the Global Oil prices? What is the impact of increasing the global oil prices on Qatar Economy?
What is its expected dividend payout ratio : Flavortech expects EBIT of $2,000,000 for the current year. The firm's capital structure consists of 40% debt and 60% equity and its marginal tax rate is 40%. The cost of equity is 14% and the company pays a 10% rate on its $5,000,000 of long term de..
What is its economic value added : Spencer Inc has the following information for the current year: Net income=$600; Net operating profit after taxes (NOPAT) = $600; Total assests = $4,000; short term investments = $500; stockholders equity =$2000; debt=$1000; and total net operating c..
Face value zero-coupon bonds : The MerryWeather Firm wants to raise $29 million to expand its business. To accomplish this, the firm plans to sell 15-year, $1,000 face value zero-coupon bonds. The bonds will be priced to yield 7 percent. What is the minimum number of bonds the fir..
What is the default risk premium : 10-year T Bonds have a yield of 5.3% and 10 year corporate bonds yield 6.75%. Also, corporate bonds have a .25% liquidity premium versus a zero liquidity premium for T-bonds, and the maturity risk premium on both Treasure and corporate 10 year bonds ..
Is the article scientifically accurate : Intellectual Impact of the Article: How well does the article function as a piece of writing (i.e. quality of language, exposition, description, voice)? Is the article scientifically accurate
What is the free cash flow for the current year : Bates Motors has the following information for the previous year: net income = $200; net operating profit after taxes (NOPAT) = $300; Total assets = $1,000 and total net operating capital = $800. The information for the current year is: net income =$..

Reviews

Write a Review

Financial Management Questions & Answers

  What is the required rate of return on a stock with a beta

Assume that the risk-free rate is 2.5% and the expected return on the market is 8%. What is the required rate of return on a stock with a beta of 1.5?

  Shares of stock outstanding at a market price

Miller's Dry Goods is an all equity firm with 48,000 shares of stock outstanding at a market price of $50 a share. The company's earnings before interest and taxes are $128,000. Miller's has decided to add leverage to its financial operations by issu..

  What is the present value of the cash flows

Your organization has been asked to invest in a continuing care retirement center. Your investment will be $600,000 per year for the next five years. After five years, cash flows will be $400,000 per year for the next 15 years. If your discount rate ..

  What is the estimated value of the store

Considering investing in a store with a 10 year lease and it will be in business for the next 10 years. It produces annual cash flows of $400,000. Discount rate 10%. Cash flows will grow at 5%. Therefore, expected annual cash flow for next year is 42..

  What would be your total real return on investment

You bought one of Rocky Mountain Manufacturing Co.’s 9 percent coupon bonds one year ago for $1,047.30. These bonds make annual payments and mature seven years from now. Suppose that you decide to sell your bonds today, when the required return on th..

  Cost of capital estimate deviate to change the decision

FastTrack Bikes, Inc. is thinking of developing a new composite road bike. Development will take six years and the costs is $296,638 per year. Once in production, the bike is expected to make $202,100 per year for 10 years. The cash inflows begin at ..

  What is the present value of the bond

A 10-year U.S. Treasury bond with a face value of $10,000 pays a coupon of 5.50% (2.750% of face value every six months). The semi annually compounded interest rate is 4.6% (a six-month discount rate of 4.6/2 = 2.3%). What is the present value of the..

  Average implied by the two outstanding debt issues

Filer Manufacturing has 8.4 million shares of common stock outstanding. The current share price is $54, and the book value per share is $5. Filer manufacturing also has two bond issues outstanding. Assume that the overall cost of debt is the weighted..

  Bond sells-coupon rate-yield to maturity of the bond

A bond sells for $983.60 and has a coupon rate of 6.90 percent. If the bond has 29 years until maturity, what is the yield to maturity of the bond?

  Bond equivalent yield is semi-annually compounded

What is the price of a T-Bond with exactly 24.5 years to maturity and coupons with rate 5.875% paid semi-annually? Its yield is 6.5% BEY (Bond Equivalent Yield is semi-annually compounded).

  In determining why a firm becomes multinational

In determining why a firm becomes multinational there are many reasons. One reason is that the firm is a market seeker. Which of the following is NOT a reason why market-seeking firms produce in foreign countries?

  Net asset value-exchange traded funds

Net Asset Value (NAV) of a mutual fund is calculated every day. The book suggests that a closed-end fund (a fund that has a fixed number of shares) can trade above or below the NAV. As an example, someone could invest in Exchange Traded Funds (ETF) o..

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd