Special Studies in Finance Practice Problem and Solution for Exam # 1


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Economic Value Added

 

Q) Pizza Hut Ltd has existing in which it has capital invested of Rs.150 crores. The after tax operating income is Rs20 crores and company & company has a cost of 12%. Estimate the Economic Value Added (EVA) of the firm.

Solution-

Capital employee = 150 crores

       NOPAT= 20 crores

       WACC= 12%

        EVA= NOPAT-(WACC x CE)

                = 20-(12% x 150)

                = 2 crores

 

 

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