The EVA of Credit Financial's African Division was (£15,000) last year. If after-tax income is £60,000 and the capital employed totaled £500,000, what is the weighted average cost of capital?
A)15%
B)3%
C)12%
D)9%

Question

Quizplus · Accepted Answer

EVA (Economic Value Added) is calculated as after-tax income minus the charge for the cost of capital employed. Given EVA = (£15,000), after-tax income = £60,000, and capital employed = £500,000, we can set up the equation: £60,000 - (£500,000 * WACC) = (£15,000). Solving for WACC gives us 15%.

The EVA of Credit Financial's African Division Was (£15,000) Last