Julio Company's after-tax operating income was $882 million.Total assets were $5,900 million and stockholder's equity was $4,050 million.Julio Company's cost of capital was 10%.Julio Company's EVA was _____.

Question

Quizplus · Accepted Answer

EVA (Economic Value Added) is calculated as NOPAT - (Capital * Cost of Capital). Here, NOPAT is $882 million, Capital is Total Assets ($5,900 million), and Cost of Capital is 10%. EVA = $882 million - ($5,900 million * 10%) = $882 million - $590 million = $292 million.

Julio Company's After-Tax Operating Income Was $882 Million