Problem:
The SCC Corp. has $1 billion in capital invested in several telecommunication projects that are expected to generate a pre-tax operating profit of $170 million next year. SCC has estimated pre-tax cost of captial of 15 percent.
Required:
Question 1: What is the pre-tax economic value added (EVA) that SCC is expected to generate next year?
Question 2: Calculate EVA first based on pre-tax operating profit and then based on expected return on invested capital.
Note: Please show basic calculation