Problem 4: Measuring and valuing shareholders value B&B Ltd has just been formed and has been financed by $ 25 million issue of share capital and a $ 15 million issue of loan notes. The proceeds of the issue have been invested in non-current assets with a life of four years and during this period; these assets will depreciate by $ 10 per year. The operating profit after tax is expected to be $ 10 million each year. There will be no replacement of non-current assets during the three-year period and no investment in working capital. At the end of the four years, the business will be wound up and the non-current assets will have no residual value. The required rate of return by investors is 10%.

Calculate shareholder value using EVA approach.