question archive Jane Doe is a private company which a management accountant is analyzing its performance
Jane Doe is a private company which a management accountant is analyzing its performance
Subject:BusinessPrice: Bought3
Jane Doe is a private company which a management accountant is analyzing its performance. So it is
trying to look at different components that are distributing to its success. The tests he wants to carry out are
the following using the table below:
Current liabilities 14500
Notes payable 55600
Equity 250000
Personal car 15000
Tax rate 30%
Net income 19500
Research and Development $7200
Training expenses for employees $6700
Sales 56200
Interest on debt 8%
Risk free rate 4%
Market return 9%
Beta 1.8
REQUIRED
1. Calculate interest expense, tax and EBIT
2. Calculate the total capital employedof the company.
3. Calculate weighted average cost of capital.
4. What is the EVA of the company?
5. Calculate Residual Income.
6. What are the major advantages of using EVA to evaluate performance
