Crampon Ltd also have an investment centre which has reported a profit of £9 million. This is after charging £3 million for the full cost of launching a new product that is expected to last for three years and increasing the provision forNe doubtful; debts by £50,000 to £150,000. Taxation is assumedtobe30 % ofthe net operating profit before tax . The company has a risk - adjusted cost of capital of 10 % The net book value of the investment centre's assets is £55 million and the replacement cost has been estimated at £70 million. Calculate the EVA
First of all, what is kind of non-cash expenses from the example of EVA(tm) calculation? Is it after-tax or pre-tax expenses? Is it extract from income statment, for example, like acc.depretiation? Second, Am I right that we adjusted CB of capital employed of Y2014 (8000) because we assumed that profit for the Y2014 was added to capital? If so, why we do not add back interest charge to capital as we did for NOPAT?
www.investopedia.com/ask/answers/063014/what-formula-calculating-weighted-average-cost-capital-wacc.asp this link shows that it should be market value to calculate the ratio D/E
Crampon Ltd also have an investment centre which has reported a profit of £9 million. This is after charging £3 million for the full cost of launching a new product that is expected to last for three years and increasing the provision forNe doubtful; debts by £50,000 to £150,000. Taxation is assumedtobe30 % ofthe net operating profit before tax . The company has a risk - adjusted cost of capital of 10 % The net book value of the investment centre's assets is £55 million and the replacement cost has been estimated at £70 million.
Calculate the EVA
Hails to you 🙌
First of all, what is kind of non-cash expenses from the example of EVA(tm) calculation? Is it after-tax or pre-tax expenses? Is it extract from income statment, for example, like acc.depretiation? Second, Am I right that we adjusted CB of capital employed of Y2014 (8000) because we assumed that profit for the Y2014 was added to capital? If so, why we do not add back interest charge to capital as we did for NOPAT?
Pre tax
sorry sir, i wonder when the WACC will be calculated based on market value and book value of debt and equity
www.investopedia.com/ask/answers/063014/what-formula-calculating-weighted-average-cost-capital-wacc.asp this link shows that it should be market value to calculate the ratio D/E