Use the information from Figure 13-2 and complete the missing informat

Use the information from Figure 13-2 and complete the missing information.

What will be an ideal response?

ANSWER

Figure 13-2 Bartlett Packaging Inc., Economic Value Added (EVA)
Amounts in $ thousands, except percentages

Operating profit (EBIT) 15,000
tax rate (t) 30.00%
EBIT × (1 – t) = NOPAT 10,500
Invested capital 25,000
Cost of capital (Kc) 11.00%
Capital charge = invested capital × Kc 2,750
EVA = NOPAT – capital charge 7,750

ROCE = NOPAT/invested capital 42.00%
ROCE – Kc 31.00%
Invested capital 25,000
EVA = (ROCE – Kc) × invested capital 7,750