A Company Has a Weighted Average Cost of Capital of 11

question 19

Multiple Choice

A company has a weighted average cost of capital of 11%, EBIT of $3.4 million, gross assets of $20.2 million, current liabilities of $6 million, and accumulated depreciation of $4 million. The company pays interest of $650,000 and has a tax rate of 34%. What is the company's Economic Value Added (EVA) ?

• A) $1.3 million
• B) $1.6 million
• C) $2.0 million
• D) $2.3 million
• E) $3.1 million

---

Definitions:

Sequestering Effect

A process in which carbon and other substances are removed from the atmosphere and stored in trees, plants, or the ocean, often discussed in the context of mitigating climate change.

Primacy Effect

The inclination to recall data from the start of a list more accurately than the details following it.

Recency Effect

A memory phenomenon that involves the ability to recall the last items in a series better than those in the middle.

Summary

A brief statement or account of the main points of something.