Here are simplified financial statements for Watervan Corporation:

INCOME STATEMENT(Figures in $ millions)Net sales..........................................................$881Cost of goods sold............................................741Depreciation........................................................31Earnings before interest and taxes (EBIT).....109Interest expense.................................................12Income before tax..............................................97Taxes.....................................................................20Net income..........................................................77

The company?s cost of capital is 8.5%.

a. Calculate Watervan?s economic value added (EVA).

b. What is the company?s return on capital? (Use start-of-year rather than average capital.)

c. What is its return on equity? (Use start-of-year rather than average equity.)

d. Is the company creating value for its shareholders?

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BALANCE SHEET (Flgures In $ milllons) End of Year Start of Year Assets $369 Current assets $312 258 $627 Long-term assets 222 $534 Total assets Llabilitles and shareholders' equlty Current llabllitles $194 $157 Long-term debt 108 121 Shareholders' equlty 256 325 $627 $534 Total llabilitles and shareholders' equity