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Economic Value Added

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Published in: Accountancy
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This topic is so easy and the format for the questions whatever i solved is enough for the students to solve any kind of questions relates to EVA.

Mahesh S / Chennai

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Qualification: B.Com (KU - 2009)

Teaches: CA - CPT, CA - IPCC, CS - Executive, CS Professional, Accountancy, Computer Science, Hindi, Mathematics, School Level Computer, Costing, Direct Tax, Statistics

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  1. 1) Variable s.c Equity LTB Total NPBIT Less:-l Less:-T NOPAT (in lakhs) Amount 2,000.00 4,000.00 6,000.00 400.00 6,400.00 16.35% 10 (Lakhs) 2,000.00 40.00 1,960.00 588.00 1,372.00 Avg Amt(%) 0.94 0.06 Add:- Less:- WA Amt 0.66667 0.33333 Less:- Ind.Cost(%) WACC 16.35% 7.00% Economic Value WACC 0.15 0.00 0.16 (Rf+B(Rm-RF)) NOPAT IAT coc EVA 7.00% (Cost of Debt after Tax) EVA Statement 1,372.00 28.00 (Int after Tax) (1,009.00) 391.00 Nov-2013 RTP an no:-20 (a) Page no.23 Booming Ltd Com.of Capital ESC Freserves Cap.Reserves Sec.Premium Equity Debn Amount 1,920.00 1,440.00 960.00 480.00 4,800.00 2,400.00 7,200.00 7 14.20 Individual Cost(%) 14.20 7.00 coc NOPAT (After Tax) coc EVA Nov 2015 MKTP 2 an 6(a) Page no:-6 WACC 9.47 2.33 12% 849.60 1,848.00 (after adding bac (849.60) 998.40 fin. Inf. In lakhs) NOS
  2. FL NOPAT ADD INT AFTER TAX SAVED LESS COC (CE*WACC) Nov 2015 an 6(a) Page no:-12 FL FL NOPAT ADD INT AFTER TAX SAVED LESS COC (CE*WACC) EVA EBIT EBT EBIT EBT EBIT EBIT(-) INTEREST 140.00 56.00 -161.28 EVA 34.72 EBIT EBIT(-) INTEREST 1.1 175.00 17.50 (52.20) 140.30 EQUITY DEB Eq.Cap FRS CR Debns 0.34 80 1.4 (fin.inf in lakhs) NOS 250,000.00 0.12 70/0 Less:- RTP Nov-2015 an 6 Delta's Ltd... EAT (Net Income) Tax Rate EBT (EBIT-INTEREST) EBIT INT.EXP (NO TAX SAVED) EBIT (OPERATING INCOME) EVA EVA DIVIDEND 0.40 MISSING EBT+INTEREST EVA/NO:- OF ES AFTR 0.60 CE WACC 0.1260 4.56 CONC:-IF Delta Ltd does not pay any dividend, we would expect the value of the firm to increase because it
  3. Added RTP-May 2015 page no:-27 Com.of Cap s.c P.S.C Deb. Less;-lmm.property held as Invst Amount 300.00 100.00 800.00 1,200.00 (100.00) 1,100.00 10.5 20 6.5 EBIT EBT WEIGH AMT Avg Amt(%) Ind.Cost(%) 0.25 0.08 0.67 Final Answer 20.00 15.00 10.50 (Non-Opg) opg CE Int.after Tax(Kd) Working Notes 1.5 F.L Add:- Less:- EBIT EBIT -Interest Less:- Less:- the int.on Debn with the NPBT) VALUE PER SHARE/DEB VALUE NOPAT IAT coc EVA 1.5(EBlT-lNTEREST) 180 EBIT Interest EBT Tax EAT WACC
  4. 1000 10 340 260 600 800 1400 1.4EBlT-80*1.4 EBIT EBIT-80 EBIT EBT VALUE PER SHARE/DEB VALUE 10.00 100.00 1.1EBlT-27.50=EBlT EBIT Interest EBT EAT (NOPAT) 112.00 79.10 75.00 54.00 80.00 288.10 250.00 538.10 1.10 27.5 275.00 (25.00) 250.00 175.00 EBIT O.4EBlT WEIGH AMT EBIT/EBlT-25 0.43 0.57 280 200 0.54 0.46 WACC 0.1 0.70 17.50 7.00 0.12 0.07 WACC 7.53 3.99 11.52 12% 0.06 0.03 9.70% will achieve higher growth, hence a higher level of EBIT. IF EBIT is higher, then all else equal the value of tl
  5. WACC 5.00 1.20 7.04 13.24 EVA Statement 168.00 84.00 (Int after Tax) 145.59 106.42 EBIT 0.5 EBIT 360 120 240 72 168
  6. N/A

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