Here are simplified financial statements for Watervan Corporation: INCOME STATEMENT(Figures in $ millions) Net sales$ 895 Cost of goods sold755 Depreciation45 ------ Earnings...

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Here are simplified financial statements for Watervan Corporation:

INCOME STATEMENT
(Figures in $ millions)
Net sales	$ 895
Cost of goods sold	755
Depreciation	45

Earnings before interest and taxes (EBIT)	$ 95
Interest expense	26

Income before tax	$ 69
Taxes	33

Net income	$ 36

BALANCE SHEET
(Figures in $ millions)
	End of Year		Start of Year
Assets
Current assets	$	383	$	340
Long-term assets		286		236

Total assets	$	669	$	576

Liabilities and shareholders’ equity
Current liabilities	$	208	$	171
Long-term debt		122		135
Shareholders’ equity		339		270

Total liabilities and shareholders’ equity	$	669	$	576

The company’s cost of capital is 7.50%.

a.	Calculate Watervan’s economic value added (EVA). (Do not round intermediate calculations. Enter your answer in millions rounded to 2 decimal places.)

Economic value added

$ [removed] million

b.	What is the company’s return on capital? (Use start-of-year rather than average capital.) (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)

Return on capital

[removed] %

c.	What is its return on equity? (Use start-of-year rather than average equity.) (Enter your answer as a percent rounded to 2 decimal places.)

Return on equity

[removed] %

Is the company creating value for its shareholders?

[removed]	Yes
[removed]	No

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