From the following information, work out the Economic Value Added by Vije Ltd.: Particulars Amount (in lakh) Shareholders' Fund 4,200 Long-term Debt 1,800 Trade Payables 750 Net Operating Profit before Interest and Tax 2

Calculation of Economic Value Added (EVA) 1. Calculate Capital Employed: Capital employed = Shareholders' fund + Long term debt = ₹ 4200 lakh + ₹ 1800 lakh = ₹ 6000 lakh 2. Calculate Cost of Debt after tax: Cost of debt after tax = Risk free rate (1 - tax rate) = 0.10 (1 - 0.30) = 7% 3. Cost of Equity: Cost of equity = 20% (Given) 4. Calculate Weighted Average Cost of Capital (WACC): Source of fund Amount (Rs. in lakh) Weight Cost of capital WACC Equity 4200 0.70 0.20 0.14 Debt 1800 0.30 0.07 0.021 Total 6000 0.161 or 16.10% 5. Calculate Net Operating Profit After Tax (NOPAT): NOPAT = (Net Operating Profit before Interest and Tax - Interest) (1 - tax rate) Interest on Long-term Debt = 10% of ₹ 1800 lakh = ₹ 180 lakh NOPAT = (₹ 2150 lakh - ₹ 180 lakh) (1 - 0.30) = ₹ 1379 lakh 6. Calculate Economic Value Added (EVA): Particulars Rs. in lakh Net operating profit after tax (NOPAT) 1379 Less: cost of operating capital employed (6000 * 16.10%) (966) Economic value added (EVA) 413