If a company's NOPAT (Net Operating Profit After Tax) is $500,000, and its Capital Employed is $2,000,000, and the WACC is 8%, what is the company's EVA?
Question
Solution 1
Economic Value Added (EVA) is a measure of a company's financial performance based on the residual wealth calculated by deducting its cost of capital from its operating profit, adjusted for taxes on a cash basis.
The formula for EVA is:
EVA = NOPAT - (WACC * Capital Employed)
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