Jim Martin is using economic value added (EVA) and market value added (MVA) to measure the performance

Question:

Jim Martin is using economic value added (EVA) and market value added (MVA) to measure the performance of Sundanci. Martin uses the following fiscal year 2000 information for his analysis:

Adjusted net operating profit after tax (NOPAT) is $ 100 million.
Total capital is $ 700 million (no debt).
Closing stock price is $ 26.
Total shares outstanding is 84 million.
The cost of equity is 14 percent.

Calculate the following for Sundanci. Show your work.
A. EVA for fiscal year 2000.
B. MVA as of fiscal year - end 2000.

Cost Of Equity
The cost of equity is the return a company requires to decide if an investment meets capital return requirements. Firms often use it as a capital budgeting threshold for the required rate of return. A firm's cost of equity represents the...

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