Kerry Back
Year | 0 | 1 | 2 | 3 | 4 |
---|---|---|---|---|---|
Invested capital | 100 | 70 | 50 | 35 | 0 |
Income | 0 | 20 | 30 | 20 | 5 |
ROIC | 0.2 | 0.428 | 0.4 | 0.143 |
\[(\text{ROIC} - \text{required return}) \times \text{lagged IC}\]
cost of capital = 10%
Year | 0 | 1 | 2 | 3 | 4 |
---|---|---|---|---|---|
Invested capital | 100 | 70 | 50 | 35 | 0 |
Income | 0 | 20 | 30 | 20 | 5 |
Charge for capital | 0 | 10 | 7 | 5 | 3.5 |
EVA | 0 | 10 | 23 | 15 | 1.5 |
Year | 0 | 1 | 2 | 3 | 4 |
---|---|---|---|---|---|
Invested capital | 100 | 70 | 50 | 35 | 0 |
Income | 0 | 20 | 30 | 20 | 5 |
ROIC | 0.2 | 0.428 | 0.4 | 0.143 | |
Extra return | 0.1 | 0.328 | 0.3 | 0.043 | |
Lagged IC | 100 | 70 | 50 | 35 | |
EVA | 10 | 23 | 15 | 1.5 |
Year | 0 | 1 | 2 | 3 | 4 |
---|---|---|---|---|---|
EVA | 10 | 23 | 15 | 1.50 | |
PV factor | 0.91 | 0.83 | 0.75 | 0.68 | |
PV of EVA | 9.09 | 19.01 | 11.27 | 1.02 | |
NPV | 40.39 |
Discounted EVA equals NPV