Doral Division of Resorts International reported net operating profit after taxes totaling $120,000 in 2014. The cost of capital is 10.5 percent and the invested capital is $560,000. R&D incurred in 2014 was $100,000. The company's policy is to amortize intangible assets over 4 years. The income tax rate is 30 percent. How much is the company's economic value added for 2014?

Question

Quizplus · Accepted Answer

EVA = NOPAT + D * (Invested Capital - NOPAT) - R&D= 120,000 + 0.105 * (560,000 - 120,000) - 100,000= 120,000 + 59,400 - 100,000= $105,825

Doral Division of Resorts International Reported Net Operating Profit After