You have been asked by an investor to compute for the Economic Value Added of the companies he is considering to invest into as follows: EVANet Investment55,000,00060,000,00070,000,000WACC8%9%10%Net Income after Tax3,510,0002,750,0005,230,0000Net Operating Income After Tax4,550,0005,450,0006,850,000 Which Company under consideration has the highest EVAWhich companies would you recommend for investment, Why?What is the EVA of each companies under consideration?

The question is based on the concept of Financial Management.

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FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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You have been asked by an investor to compute for the Economic Value Added of the companies he is considering to invest into as follows:

	E	V	A
Net Investment	55,000,000	60,000,000	70,000,000
WACC	8%	9%	10%
Net Income after Tax	3,510,000	2,750,000	5,230,0000
Net Operating Income After Tax	4,550,000	5,450,000	6,850,000

Which Company under consideration has the highest EVA
Which companies would you recommend for investment, Why?
What is the EVA of each companies under consideration?

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