Problem:
Smith's Shoe Shop had $4,000,000 in operating income last year, after-tax cost of capital of 7%, and a tax rate of 35%. The company has $14,000,000 in stockholder's equity, $17,000,000 in long-term bonds, and $1,500,000 in preferred stock.
Question1. What is the company's EVA? Please provide all computation and formulas.
Question2. What does EVA represent? Please provide all computation and formulas.