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Violet Corporation has P500,000 current liabilities, P2,500,000
noncurrent liabilities and P5,000,000
equity. It has a weighted
average cost of capital of 18% and annual earnings of P1,500,000
for the first five 19 questions remaining
years and P2,000,000 for the last 5 years. How
much is the value of the firm using economic value added?

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Draft Balance
Sheet

Liabilities Amount P Amount P Assets Amount P Amount P ePack:... Introductio... Managerial...

1st Edition 3rd Edition 14th Edition

Current liability 500000 Non-current assets ?
View all solutions
Non-current liability 2500000 Current assets ?

Equity 5000000

Economic Value
Added equals to Net operating profit after
tax Minus (Invested
capital*WACC)

3500000 Minus (7500000*18%)

3500000 Minus 1350000

Economic Value
Added 2150000

Net operating profit after

tax Equals to P1500000 Plus P2000000 equal to

Invested
Capital Equals to Non-current liability Plus Equity equals to

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