Exhibit 9-6
USE THE FOLLOWING INFORMATION TO ANSWER THE NEXT

question 119

Multiple Choice

Exhibit 9-6
USE THE FOLLOWING INFORMATION TO ANSWER THE NEXT QUESTION(S)
You are provided with the following information on Kayray Corporation. Your ultimate objective is to calculate the EVA for the firm. $\begin{array}{llcc} \text {LIFO reserve } & 60 \\ \text { Net plant, property, and equipment } & 1325 \\ \text { Other assets } &30 \\ \text {Goodwill } &325 \\ \text { Accumulated Goodwill amortized } & 65\\ \text { PV of Operating leases } & 140 \\ \text { Tax benefit from interest on expenses } & 10\\ \text {Tax benefit from interest on leases } &5 \\ \text { Taxes on non-operating income } &2 \\ \text {Implied interest on op. lease } & 9.5 \\ \text { Increase in LIFO reserve } & 12 \\ \text { Goodwill amortization } & 15 \\ \text { Operating profit } & 550\\ \text { Income tax expense } & 215 \\ \text { Net working capital } & 440 \\ \text { WACC } & 0.12\\\end{array}$

-Refer to Exhibit 9-6. Calculate the capital for the firm.

• A) 1725
• B) 1953
• C) 2524
• D) 2385
• E) 1987

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Definitions:

Common Stock

A type of security that represents ownership in a corporation, granting shareholders voting rights and a share in the company’s profits through dividends.

Equity Method Investment

An accounting technique used by firms to assess the profits earned through their investments in other companies by reporting these profits in proportion to their ownership stake.

Long-Term Investments-AFS

Available-for-Sale Long-term Investments are financial assets not classified as trading or held-to-maturity investments, valued at fair market prices with gains or losses reported in other comprehensive income.

Trading Securities

Financial instruments such as shares, bonds, or other securities that are purchased with the intention of selling them in the short term to profit from price fluctuations.