Falconer Company had net (after-tax) income last year of $12,375,400 and total capital employed of $111,754,000. Falconer's

Question:

Falconer Company had net (after-tax) income last year of $12,375,400 and total capital employed of $111,754,000. Falconer's actual cost of capital was 9%.

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...