The solution for EVA is mathematically given as
EVA= 200,000
The incremental difference between a company's rate of return (RoR) and its cost of capital is known as an enterprise's economic value added (EVA). In its most basic form, it is a method for determining how much value a firm creates as a result of the capital that is invested in it.
When the EVA of a firm is negative, it indicates that the company is not producing value from the cash that has been put into the business.
Generally, the equation for EVA is mathematically given as
EVA = EBIT ( 1- T) ] - [ Capital employed * WACC ]
Therefore
EVA =3,000,000 (1- 0.4) - 20,000,000 * 0.08
EVA= 1,800,000 - $ 1,600,000
EVA= 200,000
In conclusion, the solution for EVA is given as
EVA= 200,000
Read more about the incremental differences in the rate of return.
https://brainly.com/question/18850671
#SPJ1
