Question 11.A.7: What is the EVA® for the second year of the business in Exam...
What is the EVA ^ {\circledR} for the second year of the business in Example 11.3?
EVA ^ {\circledR} can be calculated as follows:
EVA ^ {\circledR} = NOPAT − (R × C) = £23.8m − (10% × £146.6m)
= \underline{£9.1m} (to one decimal place)
We can see that EVA ^ {\circledR} is positive and so the business increased shareholder wealth during the year.
Related Answered Questions
Question: 11.E.2
Verified Answer:
There are a number of ways in which the accuracy o...
Question: 11.A.11
Verified Answer:
Assuming no growth, PV of future \text{EVA}...
Question: 11.SE.5
Verified Answer:
Pisces plc
Adjusted NOPAT
£m
£m
(20.5)
Oper...
Question: 11.SE.3
Verified Answer:
Virgo plc
There is no single correct answer to thi...
Question: 11.SE.1
Verified Answer:
Aquarius plc
There are a number of ways in which t...
Question: 11.RQ.4
Verified Answer:
If businesses are overcapitalised it is probably b...
Question: 11.A.6
Verified Answer:
The formula suggests that in order to increase EVA...
Question: 11.A.4
Verified Answer:
Shareholder value will be the total business value...
Question: 11.RQ.3
Verified Answer:
The problem with taking changes in the market valu...
Question: 11.RQ.2
Verified Answer:
Two problems with the use of MVA as a tool for int...