00:01
First of all, let us see what all things are provided to us that is given to us, right? so let us just write that so that would be net income here.
00:10
It is given the net income which is equal to dollar six lakhs right and you have tax rate that would be equal to 40 % which is point four zero you can simply write now interest interest expense expense that would be equals to dollar two lakhs perfect now total invested total invested operating capital operating capital employed that will be equals to nine million dollars nine million dollars right and after tax after tax cost of capital capital that would be equals to ten percent that is point one zero also you can see here.
01:45
Now.
01:46
What is evea here? this is asked so eva is economic value added.
01:54
So this has some formula that is net operating profit after taxes so simply this is in short.
02:12
You can say no back in short right net operating profit after taxes.
02:18
That's it.
02:18
That is n opat right what it now you have okay.
02:26
So now this would be like some of what no pat and and not some of it is from no pat you have to subtract capital multiplied by cost of capital so when you do so you will be getting the value of eva now, how do we how are we going to do that? so now what is no pat here? no pat has also some formula, but which is given by net income plus interest expense interest expense and that would be multiplied by 1 minus tax rate, right? so this is no pat.
03:26
So i'm leaving a space here and okay, so directly we can do here so here would be no pat would be equals to we will put all the values here.
03:37
So that would be net income is dollar six lakhs right then plus interest expense that is dollar two lakhs right multiplied by one minus tax rate.
04:01
So what is the tax rate? 0 .40 right? this is what we are going to do here...