Question: J D Agribusiness has 500 000 invested capital 60 percent of
J. D. Agribusiness has $500,000 invested capital, 60 percent of which is in the form of debt. With this capital structure, the company has a weighted average cost of capital equal to 12 percent. According to J. D.’s latest income statement, the firm’s operating income is $100,000 and its marginal tax rate is 40 percent. Under the EVA approach, is J. D. Agribusiness a good company in which to invest?
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