Calculate the required return (weighted average cost of capital) Debt Equity Market Values Required return (weighted...

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Calculate the required return (weighted average cost of capital) Debt Equity Market Values Required return (weighted average cost of capital).. Calculate the Economic Profit (Economic Value Added) Year Net Operating Assets times the required return Required income in dollars $ Weights Component Weighted Cost Cost 2016 2017 2018 19,747 $ 24,940 s 24,963 $ 2019 28,447 $ 2021 2020 43,283 $ 47,803 Year 2016 Operating Income earned $ (667) $ 2017 (1,632) $ 2018 2019 2020 2021 (387) $ (69) $ 1,994 $ 6,523 Less required income Economic profit or (loss) Another way to look at this: Return on invested capital -3.38% -6.54% -1.55% -0.24% 4.61% 13.65% Weighted average cost of capital Spread Calculate the required return (weighted average cost of capital) Debt Equity Market Values Required return (weighted average cost of capital).. Calculate the Economic Profit (Economic Value Added) Year Net Operating Assets times the required return Required income in dollars $ Weights Component Weighted Cost Cost 2016 2017 2018 19,747 $ 24,940 s 24,963 $ 2019 28,447 $ 2021 2020 43,283 $ 47,803 Year 2016 Operating Income earned $ (667) $ 2017 (1,632) $ 2018 2019 2020 2021 (387) $ (69) $ 1,994 $ 6,523 Less required income Economic profit or (loss) Another way to look at this: Return on invested capital -3.38% -6.54% -1.55% -0.24% 4.61% 13.65% Weighted average cost of capital Spread

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To calculate the weighted average cost of capital WACC we need the market values weights and component costs of debt and equity Lets assume the follow... View the full answer