Explore BrainMass
Share

Explore BrainMass

    Economic Value-Added (EVA), Market Value-Added (MVA)

    This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here!

    WACC, EVA & MVA
    Use the selected statistics from the table below. Your company's name is Digby.
    Part I:
    Calculate your company's Weighted Average Cost of Capital in Year 2. In calculating cost of equity, use the CAPM. In the CAPM, use 6.0% for the risk free rate, 5.0% for the market risk premium, and assume your company is rated average in terms of financial risk, in the prime of its life cycle. Select an appropriate beta (hint: what beta reflects average risk).
    Part II:
    Calculate your company's Economic Value-Added (EVA) for Year 2.
    Part III:
    Calculate your company's Market Value-Added (MVA) for Year 2.
    Part IV:
    Suppose that the beta value you used in the previous parts is really an unlevered beta. Calculate the beta value that is consistent with your actual leverage. The debt beta should be assumed to be zero.
    Industry F48764 selected statistics for year 2
    Andrews Baldwin Chester Digby Erie Ferris
    ROS 10.58% 0.00% 6.71% 7.56% 11.86% 3.47%
    Asset Turnover 1.80 0.00 1.73 1.42 1.24 1.67
    ROA 19.06% - 22.96% 11.62% 10.74% 14.73% 5.78%
    Leverage 1.51 3.00 1.78 1.35 1.90 2.16
    ROE 28.86% - 68.87% 20.67% 14.51% 28.07% 12.47%
    Emergency Loans $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
    Sales $ 62,523,675 $ 0 $ 48,378,101 $ 43,024,448 $ 55,127,177 $ 71,388,350
    Variable Costs $ 43,638,317 $ 0 $ 35,010,627 $ 32,412,248 $ 36,170,009 $ 55,338,876
    SGA $ 5,564,286 $ 1,757,417 $ 5,382,231 $ 3,275,777 $ 4,882,519 $ 8,055,103
    EBIT $ 11,291,072 $- 2,359,112 $ 6,104,630 $ 5,723,090 $ 12,193,291 $ 5,810,519
    Profit $ 6,613,422 $- 1,963,831 $ 3,247,111 $ 3,254,745 $ 6,535,418 $ 2,476,947
    Cumulative Profit $ 10,556,581 $- 3,525,824 $ 9,566,740 $ 9,875,922 $ 12,498,627 $ 7,929,018
    Stock price $ 20.96 $ 1.00 $ 18.53 $ 18.42 $ 24.44 $ 15.75
    Market Capitalization $ 45,672,793 $ 1,974,875 $ 36,186,417 $ 40,472,137 $ 52,488,789 $ 33,396,206
    SandP Rating A C BB AAA B CCC
    Working Capital $ 7,748,581 $ 0 $ 6,897,736 $ 10,062,588 $ 11,095,108 $ 7,194,037
    Days of Working Capital 45.2 0.0 52.0 85.4 73.5 36.8
    Free Cash Flow $- 3,556,800 $- 10,133,258 $ 756,976 $- 2,899,843 $- 3,302,501 $- 4,488,388
    Plant and Equipment $ 30,450,000 $ 9,018,000 $ 24,903,200 $ 24,200,000 $ 29,700,000 $ 30,020,000
    Total Assets $ 34,703,292 $ 8,551,426 $ 27,954,309 $ 30,299,943 $ 44,353,298 $ 42,819,656
    Plant Utilization 198.13% 0.10% 137.04% 140.70% 198.13% 166.13%
    Low End Tech Segment Share 20.69% 0.00% 18.87% 19.14% 28.60% 12.70%
    High End Tech Segment Share 22.80% 0.00% 15.90% 9.55% 6.76% 44.98%
    Overall Market Share 21.42% 0.00% 17.84% 15.82% 21.05% 23.87%
    Complement 291 0 255 246 286 369
    Overtime 0.07% -100.00% 0.22% 0.00% 0.04% 0.00%
    Turnover Rate 10.01% 10.00% 10.02% 10.00% 10.00% 10.00%
    Productivity Index 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%

    Industry F48764 selected statistics for year 1
    Andrews Baldwin Chester Digby Erie Ferris
    ROS 2.98% 0.00% 8.33% 8.58% 6.84% 6.08%
    Asset Turnover 1.95 0.20 1.88 1.77 1.86 1.59
    ROA 5.81% - 28.91% 15.62% 15.19% 12.70% 9.69%
    Leverage 1.54 1.59 1.47 1.42 1.91 1.85
    ROE 8.94% - 46.00% 22.99% 21.56% 24.25% 17.97%
    Emergency Loans $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
    Sales $ 48,903,529 $ 2,790,715 $ 46,043,013 $ 48,177,836 $ 50,866,274 $ 48,791,849
    Variable Costs $ 40,038,930 $ 2,353,050 $ 34,813,834 $ 37,095,070 $ 38,860,159 $ 36,636,563
    SGA $ 4,522,788 $ 5,781,861 $ 3,437,645 $ 2,758,513 $ 4,166,853 $ 5,122,628
    EBIT $ 2,973,144 $- 5,585,097 $ 6,660,867 $ 7,134,254 $ 6,534,005 $ 5,856,658
    Profit $ 1,457,972 $- 4,047,179 $ 3,834,443 $ 4,135,990 $ 3,478,022 $ 2,966,885
    Cumulative Profit $ 3,943,159 $- 1,561,993 $ 6,319,629 $ 6,621,177 $ 5,963,209 $ 5,452,071
    Stock price $ 12.47 $ 1.31 $ 17.08 $ 17.36 $ 16.36 $ 15.31
    Market Capitalization $ 27,182,891 $ 2,626,842 $ 34,153,330 $ 38,148,506 $ 32,727,649 $ 31,567,356
    SandP Rating A A AA AA B BB
    Working Capital $ 8,541,826 $ 13,987,207 $ 7,075,096 $ 14,061,177 $ 8,059,204 $ 8,772,067
    Days of Working Capital 63.8 0.0 56.1 106.5 57.8 65.6
    Free Cash Flow $ 26,527 $ 8,164,534 $ 365,448 $ 5,163,564 $ 2,096,372 $- 1,133,694
    Plant and Equipment $ 19,030,000 $ 18,000 $ 20,735,200 $ 16,200,000 $ 18,700,000 $ 21,180,000
    Total Assets $ 25,100,628 $ 13,998,007 $ 24,547,638 $ 27,236,686 $ 27,381,575 $ 30,618,342
    Plant Utilization 175.85% 0.10% 161.00% 166.32% 179.57% 161.00%
    Low End Tech Segment Share 18.88% 1.21% 19.89% 20.38% 22.31% 17.34%
    High End Tech Segment Share 24.14% 1.18% 16.80% 17.58% 18.02% 22.29%
    Overall Market Share 20.54% 1.20% 18.91% 19.49% 20.95% 18.91%
    Complement 273 0 250 258 279 250
    Overtime 0.05% -100.00% 0.00% 0.17% 0.00% 0.00%
    Turnover Rate 10.01% 0.00% 10.00% 10.02% 10.00% 10.00%
    Productivity Index 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%

    © BrainMass Inc. brainmass.com October 10, 2019, 4:22 am ad1c9bdddf
    https://brainmass.com/business/weighted-average-cost-of-capital/economic-value-added-eva-market-value-added-mva-458003

    Attachments

    Solution Summary

    Solution explains Economic Value-Added (EVA), Market Value-Added (MVA)

    $2.19