252,670,000 Sales for 2015 were $455,150,000, and EBITDA was 15% of sales. Furth

Question

252,670,000

Sales for 2015 were $455,150,000, and EBITDA was 15% of sales. Furthermore, depreciation and amortization were 11% of net fixed assets, interest was $8,575,000, the corporate tax rate was 40%, and Laiho pays 40% of its net income as dividends.

Assume that the firm's after-tax cost of capital is 10.5%. What is the firms's 2015 EVA? Assume that the firm's stock price is $22 per share and that at year-end 2015 the firm has 10 million shares outstanding. What i the firm's MVA at year-end 2015?

2015 2014 Cash 102,850,000 89,725,000 Accounts receivable 103,365,000 85,527,000 Inventories 38,444,000 34,982,000 Total current assets 244,659,000 210,234,000 Net fixed assets 67,165,000 42,436,000 Total assets 311,824,000 252,670,000 Accounts payable 30,761,000 23,109,000 Accruals 30,477,000 22,656,000 Notes payable 16,717,000 14,217,000 Total current liabilties 77,955,000 59,982,000 Long-term debt 76,264,000 63,914,000 Total liabilties 154,219,000 123,896,000 Common stock 100,000,000 90,000,000 Retained earnings 57,605,000 38,774,000 Total common equity 157,605,000 128,774,000 Total liabilities and equity 311,824,000

252,670,000

Explanation / Answer

Since, WACC is given after tax there is no use of finding debt cost and equity cost to the company in percentage term's as per the WACC method. Rest proceed normally towards the question.

Particulars 2015 Sales $      455,150,000.00 EBITDA @ 15% 68272500 Depriciation @ 11% of net fixed asset's 7388150 EBIT 60884350 Interest 8575000 EBT 52309350 Less: Taxes @40% 20923740 EAT 31385610 Add: Depriciation 7388150 Net earnings available to shareholder ( NOPAT) 38773760 Dividend's Paid $        15,509,504.00 EVA=(ROIC-wacc)(total assets-current liability) $        10,134,377.03 Return on capital invested 16.58% WaCC 10.50% MVA = Company's market value( Debt+ Equity)-Invested capital(Total assets-current liabilties) $      154,219,000.00

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