Assume that a firm's capital structure consists of $3,750.000 of doubt at an after-tax cost of 6.40 percent, $1,500,000 of preferred at a cost of 9.0 percent, and $9,750.000 of stock at a cost 18.60 percent. Also assume that the firm has earnings before interest and taxes (EBIT) of S4,875,800 and a tax rate of 40.0 percent; you should now be able to determine the firm's economic value added (EVA) for the year. Now assume that this EVA will be constant over the infinite life of the firm. 

Given this information, determine the market value added (MNA=NPV) for the firm.

 

Answer rating: 100% (QA)

To determine the Market Value Added MVA for the firm we need to calculate the Net Present Value NPV of the firms Economic Value Added EVA over its infinite life EVA is calculated as the difference bet... View the full answer