Assume division 1 of the XYZ Company had the following results last year (in thousands). Management's required rate of return is 8% and the weighted average cost of capital is 6%. Its effective tax rate is 30%.

- What is the division's economic value added?
A) $60,000
B) $130,000
C) $270,000
D) $430,000

Question

Assume division 1 of the XYZ Company had the following results last year (in thousands) . Management's required rate of return is 8% and the weighted average cost of capital is 6%. Its effective tax rate is 30%.

- What is the division's economic value added?

- What is the division's economic value added?
A) $60,000 
B) $130,000 
C) $270,000 
D) $430,000

Quizplus · Accepted Answer

The Answer is B

Assume Division 1 of the XYZ Company Had the Following