Carolina Corporation has an after-tax operating income of $3,200,000 and a 9% weighted-average cost of capital. Assets total $7,000,000 and current liabilities total $1,800,000. On the basis of this information, Carolina's economic value added is:

Question

Quizplus · Accepted Answer

Economic Value Added (EVA) = After-tax Operating Income - (Total Assets - Current Liabilities) x Weighted Average Cost of Capital

EVA = $3,200,000 - ($7,000,000 - $1,800,000) x 9%
EVA = $2,732,000

Therefore, the answer is B, $2,732,000.

Carolina Corporation Has an After-Tax Operating Income of $3,200,000 and a 9