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Compute the economic value added

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Reference no: EM131784790

Problem

XYZ Company's net operating profit before taxes is $120million. The tax rate is40%. XYZ's total assets (invested capital) are $900million, and current liabilities are $120million. The weighted average cost of capital (WACC) is7%.

Required:

Compute the economic value added (EVA).

To do that, first compute NOPAT = $million(if you get say $55.4million, enter 55.4, not 55,400,000)

After that, compute EVA = $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: EM131784790

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