This finance question came in my subject past paper. Any response would be highly appreciated. Thanks?

P&L for the year xx

拢000

Turnover300
___
PBIT 60

Interest12

Tax24
___
PAT24

Balance Sheet as at xx

拢000

Fixed Assets 140
Current Assets 60
Debt 100
Net Assets 100
Equity 100

Tax is charged on PBIT after deduction of interest at a rate of 50%, and BKG鈥檚 after tax cost of capital (WACC) is 12%. The equity of the company consists of 100,000 shares, with a current market value of 拢2 per share.

What are the market value added and economic value added figures for BHG plc? Briefly indicate how these two concepts differ from one another.

What is the difference, conceptually and numerically, between the WACC and the return on capital employed? How does the difference between these two measures relate to economic value added?

CEO of Co., said, 鈥淓VA makes managers act like shareholders.鈥?Do you agree? Explain your reasoning

The trick lies in understanding the question. If you did not; you did not go through your text books.
Basic = TRADING ON EQUITY.
Current value of the share = (2 x 100000) + 24 x 1000 = 224000
Original value (FV) = 1 (pnd) Traded value = 2 (pnd) After results tradable value = 2.24 (pnd)
Added Economic Value = 300000 / 100000 = 3(pnd) per shareholder.
The concenpts and explanations are found in basic financial management text books (by any authors)

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