I've found out the EVA for each one as you can see but don't know how to calculate ROC. I think it's operating income/capital charge. Anyways I wanted to ask how I would solve part B which is telling me to examine. Can you tell me what you would do for B а)Compute both Economic Value-Added (EVA) and Return on Capital (ROC)statistics for each of the Divisions. Take care to show workings and to lay-outcalculations in a clear format.ANDb)Examine the relative merits and limitations of Economic Value-Added (EVA)and Return-on-Capital (ROC) measures, explaining how they could best beused to assess managerial performance internally and to report performance tocapital markets. Réčéntly Financial LogicalTextDate & Lookup & Maths &Timea TraceionUsedMoreO Create from SelectionReferenceTrigFunctionsA RemoxV fxCFG.H.K.Calculation of Economic Value Added£ ThousandGeneration Distribution New EnergyOperating IncomeAdd: Interest on Debt29,00614,1561,026906040Add: Once-off write down in value of investments15000.Add: Exceptional cost of fireEqual: Adjusted profit for yearLess: Capital Charge (10%)EVA for financial year80030,59614,2161,86680952115134722,50112,101519Capital Charge CalculationShareholder Capital InvestedAdd: Debt Capital (Both Long and Short-term)79,35020,15012,85016001000620Total80,95021,15013,47010% Capital Charge809521151347

Before investing in new projects or assets, profitability and net benefits are evaluated. EVA and…

a) Compute both Economic Value-Added (EVA) and Return on Capital (ROC) statistics for each of the Divisions. Take care to show workings and to lay-out calculations in a clear format. AND b) Examine the relative merits and limitations of Economic Value-Added (EVA) and Return-on-Capital (ROC) measures, explaining how they could best be used to assess managerial performance internally and to report performance to canital markets

a) Compute both Economic Value-Added (EVA) and Return on Capital (ROC) statistics for each of the Divisions. Take care to show workings and to lay-out calculations in a clear format. AND b) Examine the relative merits and limitations of Economic Value-Added (EVA) and Return-on-Capital (ROC) measures, explaining how they could best be used to assess managerial performance internally and to report performance to canital markets

Corporate Fin Focused Approach

5th Edition

ISBN:9781285660516

Author:EHRHARDT

Publisher:EHRHARDT

Chapter7: Valuation Of Stocks And Corporations

Section: Chapter Questions

Problem 23SP

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