Falconer Company had net (after tax) income last year of $1,100,000 and operating assets of $3,000,000 Falconers actual cost of capital was 11 percent Required 1 Calculate the EVA for Falconer Company 2 Is Falconer creating or destroying wealth ...

Falconer Company had net (after-tax) income last year of $1,100,000 and operating assets of $3,000,000. Falconers actual

Question:

Falconer Company had net (after-tax) income last year of $1,100,000 and operating assets of $3,000,000. Falconer’s actual was 11 percent.

Required:
1. Calculate the EVA for Falconer Company.
2. Is Falconer creating or destroying wealth?

Cost Of Capital
Cost of capital refers to the opportunity cost of making a specific investment . Cost of capital (COC) is the rate of return that a firm must earn on its project investments to maintain its market value and attract funds. COC is the required rate of...