Question

The ABS company has a capital base of $190 million, an opportunity cost of capital (k) of 20%, a return on assets (ROA) of 10%, and a return on equity (ROE) of 30%.

What is the economic value added (EVA) for ABS?

Answer 1

Answer:

Therefore, the Economic value added is -19.000.000

Explanation:

the economic value added (EVA) for ABS is:

Economic value added = (return on assets x Cost of capital) x Capital base

=(10%-20%)x190.000.000

=-19.000.000

Therefore, the Economic value added is -19.000.000