Business College

For 2018, Gourmet Kitchen Products reported $23 million of sales and $18 million of operating costs (including depreciation). The company has $15 million of total invested capital. Its after-tax cost of capital is 10% and its federal-plus-state income tax rate was 35%. What was the firm's economic value added (EVA), that is, how much value did management add to stockholders' wealth during 2018?

Answers

Answer 1

Answer:

$1,750,000

Explanation:

Calculation for how much value did management add to stockholders' wealth during 2018

First step is to calculate the Operating income

Operating income=23 million-18 million

Operating income= 5 million

Now let calculate the EVA=

EVA= (5,000,000 *(100-35%))-($15,000,000*10%)

EVA=($5,000,000*65%)- ($15,000,000*10%)

EVA=$3,250,000-$1,500,000

EVA=$1,750,000

Therefore the amount of value that the management add to stockholders' wealth during 2018 will be $1,750,000

Related Questions

Which activity does the IRS allow nonprofit organizations to engage in?

advertising tax deductions for donations
compensating business owners based on profits
selling pharmaceuticals if it is a healthcare organization
increasing the value of shareholder’s investments

Will give brainliest to correct answer!

Answers

Answer: advertising tax deductions for donations

Explanation:

The activity does the IRS allow nonprofit organizations to engage in is

advertising tax deductions for donations.

What is IRS?

It stands for Internal revenue service that administered the federal tax laws. In this, it contains the processing of tax return, tax payer service, and the enforcement.

So based on this, we can say that The activity does the IRS allow nonprofit organizations to engage in is advertising tax deductions for donations.

learn more about revenue here: https://brainly.com/question/24506060

Retained earnings can be decreased by all of the following except for Group of answer choices stock splits. some disposals of treasury stock. stock dividends. cash dividends.

Answers

Answer:

stock splits.

Explanation:

Retained earnings also known as accumulated earnings, can be defined as the total amount of net income held by a corporation for its future use after paying out dividends to its shareholders.

The retained earnings statement refers to a financial statement that enumerate changes in retained earnings for an organization over a specific period of time. The retained earnings statement is the statement of owner's equity that outlines details of changes in the amount of retained earnings (profits) over a specified period in an organization.

The main purpose of preparing a retained earnings statement is to boost investor's confidence and improve market value.

Retained earnings can be decreased by the following; some disposals of treasury stock, stock dividends, cash dividends except for stock splits.

The average number of times each dollar in the money supply is used to purchase goods and services is called:______.
a. the fractional reserve system.
b. the velocity of money.
c. the discount rate.
d. the quantity theory of money.

Answers

Answer:

o think the answer is the discount rate

The average number of times each dollar in the money supply is used to purchase goods and services is called the velocity of money.

What are the goods?

The term Goods are products and resources that satisfy people's needs and wants. A good can be a natural science object, a provided service, or some accumulation of the two. Just about anything is good if it supplies some kind of benefit to consumers.

The velocity of money refers to The frequency with which an average dollar is spent on goods and services in a certain period of time is known as the velocity of money.

As a result, When the money supply and its velocity as a product grow more quickly than real GDP, prices rise.

Therefore, The right option (B) is correct.

Learn more about goods here:

https://brainly.com/question/12802278

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