The following information is available of a concern. Calculate Economic Value Added (EVA). 10% Debt ₹ 2,000 crores Equity capital ₹ 500 crores Reserves and Surplus ₹ 7,500 crores Risk-free rate 6% Beta factor 1.05 Market

Particulars Cost of Debt (K d ) = Interest × (1-tax rate) = 10% × (1-0.3) = 7.00% Cost of Equity (K e ) = Risk free rate + (Beta × Market Risk Premium) = 6% +1.05(16%-6%) = 16.5% Debt equity ratio (as given in the question) = 2000: (500+7500) = 20% & 80% WACC=[[K d ]× Debt% + [K e ]× Equity%] = [7.00 × 20%] + [16.5 × 80%] = 14.60% Operating Profit after tax = ₹ 1,800 crores EVA = NOPAT - Cost of Capital Employed = [(₹ 1,800 cr.) - (14.60%) × ₹ 10,000 cr.] = ₹ 1, 800 cr. - ₹ 1460 cr. = ₹ 340 cr.