The table below shows a condensed income statement and balance sheet for Androscoggin Coppers Rumford...
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Accounting
The table below shows a condensed income statement and balance sheet for Androscoggin Coppers Rumford smelting plant (figures in $ millions). Assume the cost of capital is 10%.
Income Statement for 2018
Assets, December 31, 2018
Revenue
$
56.96
Net working capital
$
7.05
Raw materials cost
18.69
Operating cost
21.06
Investment in plant and equipment
69.63
Depreciation
4.47
Less accumulated depreciation
21.04
Pretax income
$
12.74
Net plant and equipment
$
48.59
Tax at 21%
2.68
Net income
$
10.06
Total assets
$
55.64
a. Calculate the plants EVA. (Enter your answer in millions rounded to 2 decimal places.)
b. As the table above shows, the plant is carried on Androscoggins books at $48.59 million. However, it is a modern design, and could be sold to another copper company for $98 million. How should this fact change your calculation of EVA? (Negative answers should be indicated by a minus sign. Enter your answer in millions rounded to 2 decimal places.)
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