Compute the Economic Value Added (EVA) on the assumption that the weighted-average after-tax cost of capital...

  

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Compute the Economic Value Added (EVA) on the assumption that the weighted-average after-tax cost of capital is 10%, Equity at 500 shares @P25 and outstanding Notes Payable of P5,000. Income tax expense is 30%. NET OPERATING INCOME Add (Less): Other income Interest Expenses Net Income before Income Tax Less: Income Tax Expense Net Income for the period YR 2 4,426.00 500.00 1,000.00 4,226.00 1,267.80 2,958.20 YR 1 1,904.00 300.00 1,000.00 1,766.00 529.80 1,236.20 21. R. Isidro has a P1,000,000 portfolio containing the assets K, O, N, and H. P250,000 is invested in Asset K with a beta of 3.0, P150,000 in Asset O with a beta of .5, P350,000 in Asset N with a beta of 4.0 and the remainder in Asset H with a beta of 1. If the risk- free rate is 2.5% and the market premium is 8%, what is the portfolio rate of the return? 22. R. Sandagon has a 100,000 savings in the bank. He faced with two investment opportunities, to invest in Treasury bond and to invest in Asset Scroll with a return equal to market. Assuming R. Sandagon invested 50% in the Treasury bond and the remainder in Asset Scroll, what is the beta of R. Sandagon's portfolio? 23. Combining Asset A and B with betas of 1.5 and 3 will most likely produce a portfolio with a beta of: 24. What is the market rate of return if the rate of return for an asset with a beta of 3 is 20% assuming a risk-free rate of 5%? 25. Alegarbes Investments has the following investments: A Asset (stocks) Number of share Price per share Beta What is the beta of the portfolio? 1,000 150 2 B 2,000 75 1.5 Compute the Economic Value Added (EVA) on the assumption that the weighted-average after-tax cost of capital is 10%, Equity at 500 shares @P25 and outstanding Notes Payable of P5,000. Income tax expense is 30%. NET OPERATING INCOME Add (Less): Other income Interest Expenses Net Income before Income Tax Less: Income Tax Expense Net Income for the period YR 2 4,426.00 500.00 1,000.00 4,226.00 1,267.80 2,958.20 YR 1 1,904.00 300.00 1,000.00 1,766.00 529.80 1,236.20 21. R. Isidro has a P1,000,000 portfolio containing the assets K, O, N, and H. P250,000 is invested in Asset K with a beta of 3.0, P150,000 in Asset O with a beta of .5, P350,000 in Asset N with a beta of 4.0 and the remainder in Asset H with a beta of 1. If the risk- free rate is 2.5% and the market premium is 8%, what is the portfolio rate of the return? 22. R. Sandagon has a 100,000 savings in the bank. He faced with two investment opportunities, to invest in Treasury bond and to invest in Asset Scroll with a return equal to market. Assuming R. Sandagon invested 50% in the Treasury bond and the remainder in Asset Scroll, what is the beta of R. Sandagon's portfolio? 23. Combining Asset A and B with betas of 1.5 and 3 will most likely produce a portfolio with a beta of: 24. What is the market rate of return if the rate of return for an asset with a beta of 3 is 20% assuming a risk-free rate of 5%? 25. Alegarbes Investments has the following investments: A Asset (stocks) Number of share Price per share Beta What is the beta of the portfolio? 1,000 150 2 B 2,000 75 1.5

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21First lets calculate the Economic Value Added EVA EVA is a measure of a companys financial performance based on the residual wealth calculated by deducting the cost of capital from its operating pro... View the full answer