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Worldatwork Exam c8 Topic 3 Question 63 Discussion

Actual exam question for Worldatwork's c8 exam
Question #: 63
Topic #: 3
[All c8 Questions]

The XYZ Company opened a new manufacturing facility with a capital investment of 10,000,000. The cost to obtain the capital was 8%. In its first year of operations, the facility's net operating profit after taxes was 10,500,000. What was the economic value added (EVA) using the EVA formula?

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Suggested Answer: D

by Margart at Feb 07, 2024, 03:35 PM

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Vallie
6 months ago
That would be 10,500,000 - 800,000 = 9,700,000. So, my answer is D) 9,700,000.
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Samira
6 months ago
Yes, that's correct. So, it would be 10,500,000 - (10,000,000 * 8%) = EVA.
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Marjory
6 months ago
I think the EVA formula includes subtracting the cost of capital from the net operating profit after taxes.
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Roy
6 months ago
Candidate 1: It's interesting to see different perspectives on this question, I guess we'll have to go with our best judgement during the exam.
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Audra
6 months ago
Candidate 2: I understand where you're coming from, but I still think option B) 840,000 is the most accurate answer based on the formula.
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Jospeh
7 months ago
Candidate 4: I'm leaning towards option A) 500,000 as well, it seems to make sense given the numbers provided.
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Dominque
7 months ago
Candidate 3: I see your point, but I think the EVA would actually be 9,700,000 considering the capital investment and the profit generated.
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Alline
7 months ago
Candidate 2: I disagree, I believe the EVA would be 840,000 because the net operating profit after taxes was higher than the cost of capital.
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Azzie
7 months ago
Candidate 1: I think the economic value added (EVA) would be 500,000 based on the EVA formula.
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