If you have net operating profit after tax of $100,000, capital employed of $500,000 and WACC of 10%, your economic value added is _______________560004500010000050000
Question
If you have net operating profit after tax of 500,000 and WACC of 10%, your economic value added is _______________560004500010000050000
Solution
The Economic Value Added (EVA) is calculated using the formula:
EVA = Net Operating Profit After Tax (NOPAT) - (Weighted Average Cost of Capital (WACC) * Capital Employed)
Given that NOPAT = 500,000, and WACC = 10% (or 0.10 when expressed as a decimal), we can substitute these values into the formula:
EVA = 500,000) EVA = 50,000 EVA = $50,000
So, the Economic Value Added is $50,000.
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