Axis company is a very small company in terms of market capitalization. The information about this company is given below: 

Total assets = $200000 

Current assets = $45000 

Half of the investment is financed by liability and the rest is financed by equity 

Cost of equity = 12% 

Cost of debt = 6% Tax rate = 30% 

Earning before interest and tax = $250000 

a) Calculate the capital charge. 

b) Calculate the equity charge 

c) Calculate the economic value added (EVA) 

d) Compare the EVA with the net income of the company and what does it indicate to a management accountant?

Answer rating: 100% (QA)

Given Total assets 200000 Half of the investment is financed by equity and the rest by liability and ... View the full answer