See the attached file for full problem.
1) Bendix has operating capital of $40 million and ROA of 13% on assets of $55. At what WACC would EVA be $1 million?
2) An American manufacturer is comparing its degree of operating leverage with that of a Chinese competitor. What is DOL of the US company? What is the DOL of the Chinese Company?
sales 150000 180000
profits 23000 32000
sales 150000 190000
profits 6500 7500.
The solution calculates the WACC for a level of EVA and the DOL for a company.