Scranton Shipyards has $20 million in total investor-supplied operating capital, and its WACC is 10%. Scranton has the following income statement: What is Scranton's EVA?

Question

Quizplus · Accepted Answer

EVA (Economic Value Added) is calculated as NOPAT - (WACC * Capital). Assuming NOPAT is not provided, we use the given WACC (10%) and capital ($20 million) to find the cost of capital: 0.10 * $20 million = $2 million. If NOPAT is $2.4 million (implied from the choices), then EVA = $2.4 million - $2 million = $400,000.

Scranton Shipyards Has $20 Million in Total Investor-Supplied Operating Capital