The following information for Alpha Company was available for the past year:
Management has a 25% target rate of return. Alpha Company's weighted average cost of capital is 17% and its effective tax rate is 32%.
Calculate the EVA.
Definitions:
Direct Labor
The work of employees that can be directly attributed to the production of goods or services.
Fixed Overhead
Regular, fixed expenses associated with the operations of a business that do not vary with production volume.
Raw Material
Basic materials used in the production process of goods, often processed in intermediate steps before fabrication of the final product.
Fixed Overhead
Charges that keep the same level despite the degree of manufacturing or sales activities, including space rental, worker wages, and protection plans.
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