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EVA For 2016, Gourmet Kitchen Products reported $22 million of sales and $19 million of operating costs (including depredation). The company has $15 million of total invested capital. Its after tax cost of capital is 10%, and its federal-plus-State income tax rate was 36%. What was the firm’s economic value added (EVA), that is, how much value did management add to stockholders’ wealth during 2016?

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Fundamentals of Financial Manageme...

9th Edition
Eugene F. Brigham + 1 other
Publisher: Cengage Learning
ISBN: 9781305635937
BuyFind

Fundamentals of Financial Manageme...

9th Edition
Eugene F. Brigham + 1 other
Publisher: Cengage Learning
ISBN: 9781305635937

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Chapter
Section
Chapter 3, Problem 11P
Textbook Problem

EVA For 2016, Gourmet Kitchen Products reported $22 million of sales and $19 million of operating costs (including depredation). The company has $15 million of total invested capital. Its after tax cost of capital is 10%, and its federal-plus-State income tax rate was 36%. What was the firm’s economic value added (EVA), that is, how much value did management add to stockholders’ wealth during 2016?

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Chapter 3 Solutions

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