In 2012 Advantage Cable Inc. had $250,000 in invested capital, a WACC

In 2012 Advantage Cable Inc. had $250,000 in invested capital, a WACC of 9.35%, EBIT of $75,000, and a tax rate of 30%. With this information please estimate the economic value added (EVA) for the firm.

A) $29,125
B) $23,375
C) $52,500
D) There is not enough information to answer this question.

ANSWER

A
Explanation: A) EVA = EBIT * (1- tax rate) – capital charges . EVA = $75,000 * (1-.3 ) – $250,000 * .0935 = $29,125.