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10.08.2020 21:40
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Gpd corporation has operating income (ebit) of $300,000, total assets of $1,500,000,

Gpd corporation has operating income (ebit) of $300,000, total assets of $1,500,000, and its capital structure consists of 40% debt and 60% common equity.total assets equal total invested capital. the firm’s after-tax cost of capital is 10.5% and its tax rate is 40%. the firm has 50,000 shares of common stock currently outstanding and the current price of a share of common stock is $27.00. what is the firm’s economic value added (eva)?
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savannaflorian5141
savannaflorian5141
4,4(60 marks)

$22,500

Explanation:

First step is to calculate the net income which shall be calculated using the following formula:

EBIT                                          $300,00

taxes(300,000*40%)              ($120,000)

Net income                             $180,000

Now we have to calculate the EVA which can be determined using the below mentioned formula:

EVA=Net income- (invested capital*cost of capital)

      =180,000-(1,500,000*10.5%)

      =$22,500

webbjalia04
webbjalia04
4,9(64 marks)

5) minimized inventory

Explanation:

If a company adopts a low-cost strategy, it must build a supply chain with minimized inventory, which configures that the company is adopting a just-in-time management strategy, which is an administration system whose philosophy is a production system according to demand, avoiding wasted stock and, consequently, unnecessary costs.

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