Scranton Shipyards Has $8 What Is Scranton's EVA? Answer Options Are Provided in Whole

question 6

Multiple Choice

Scranton Shipyards has $8.0 million in total invested operating capital,and its WACC is 10%.Scranton has the following income statement: $\begin{array}{lr}\text { Sales } & \$ 10.0 \text { million } \\\text { Operating costs } &6.0 \text { million }\\\text { Operating income (EBIT) } & 4.0 \text { million }\\\text { Interest expense } & 2.0 \text { million }\\\text { Earnings before taxes (EBT) } & \$ 2.0 \text { million } \\\text { Taxes (40\%) } & 0.8 \text { million } \\\text { Net income } & \$ 1.2 \text { million }\end{array}$
What is Scranton's EVA? Answer options are provided in whole dollar.

• A) $1,840,000
• B) $2,000,000
• C) $1,600,000
• D) $1,520,000
• E) $1,440,000

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Definitions:

Complementary Resources

Different types of goods or services that, when used together, enhance each other's value and performance.

Market Value

The ongoing rate at which a commodity or service can be traded in the public market.

Productivity

The measurement of efficiency in which goods and services are produced, often assessed by the amount of output per unit of input.

Marginal Revenue Product Curve

A graphical representation showing how the addition of one more unit of a resource affects the total revenue.