show formulas for each calculation thanks! The CEO of TPI Inc. considers...

80.2K

Verified Solution

Question

Accounting

show formulas for each calculation thanks! image
The CEO of TPI Inc. considers the possibility to restructure one of the business segments of TPI. The analysts at TPI have prepared projections for the operations of the segment. These forecasts are provided in Table A. In addition to that, they have estimated that the cost of capital for this segment would be 14%, while its long-term growth rate would be 7%. Moreover, you know that the tax rate is 38% and the initial invested capital is $70 million. Your task is to perform EVA analysis of the segment (assume the current year is 2007). Calculate the enterprise value. You need to measure the PV of the EVA and PV of the Continuation EVA. EBIT Depreciation Increase in Deferred tax Capex ANWC Table A 2008 2009 24.8 28.0 5.8 7.6 0.8 0.6 18.2 12.2 -0.8 -0.8 2010 32.0 9.2 0.7 14.3 1.0 2011 34.0 10.2 0.7 14.3 1.8 2012 37.0 11.0 1.0 12.0 0.0 Hints! Please refer to the excel file for Exhibit 15.2, 15.3, and 15.4. WTT Inc. Economic Value Added (EVA) Valuation" The current year is 2007 and the value of invested capital is given: $70 million. We can calculate NOPAT as EBIT*(1-t) + Increase in Deferred Tax. The capital charge in each period is calculated as the value of the invested capital (as of the end of the previous period) multiplied by the cost of capital

Answer & Explanation Solved by verified expert
Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
Become a Member

Other questions asked by students