You are analyzing the firm’s financial performance based on the following data.
Balance sheet items:
Marketable securities=50,000
Non-operating long-term assets =20,000
Cash=120,000
Accounts receivable=180,000
Inventory=100,000
Operating long-term assets (net of depreciation) = 800,000
Accounts payable=90,000
Accrued taxes=100,000
Short-term debt=120,000
Long-term debt=600,000
(1,000 par value, 600 bonds)
Equity=360,000
(10 book value per share, 36,000 shares)
Market values:
Market value of the marketable securities =50,000
Market value of non-operating long-term assets =25,000
Market value of short-term debt: 120,000
Common stock:
Market price per share: 13.50
Long-term bonds:
Market price per bond: 950
——————————————————–
WACCCOMP = .10
Revenue (Sales) = 500,000
Fixed costs (FC) = 40,000
Variable costs (VC) = 50% of sales
Corporate tax rate = 40%
Depreciation = 55,000
——————————————————–
What is the firm’s economic value added (EVA) based on operating capital?
Select one:
a. -$8,600
b. -$8,300
c. -$9,000
d. -$8,000