Compute the May 20xx EVA for an investment center with the following information: $\begin{array}{|lr|}
\hline \text { Pre-tax operating income for May 20xx } & \$ 18,000,500 \
\text { Income tax expense for May 20xx } & 5,100,000 \
\text { Assets at May 31, 20xx } & 13,200,500 \
\text { Current liabilities at May 31, 20xx } & 10,000,000 \
\text { Long-term liabilities at May 31, 20xx } & 3,500,000 \
\text { Minimum desired rate of return } & 19 \% \
\hline
\end{array}$
A) $12,292,405
B) $12,710,500
C) $11,931,500
D) $12,235,500

Question

Quizplus · Accepted Answer

EVA = (NOPAT - (WACC * Assets))NOPAT = $18,000,500 - $5,100,000 = $12,900,500WACC = (19% * (13,200,500 - 10,000,000 - 3,500,000) / 13,200,500) = 17.1%EVA = ($12,900,500 - (0.171 * $13,200,500)) = $12,292,405

Compute the May 20xx EVA for an Investment Center with the Following