Answer:
$1,575,000
Explanation:
Net operating profit before taxes:
= Sales - operating costs
= $22,500,000 - $18,000,000
= $4,500,000
Net operating profit after taxes:
= Net operating profit before taxes - Taxes
= $4,500,000 - ($4,500,000 × 0.35)
= $4,500,000 - $1,575,000
= $2,925,000
Economic Value Added:
= Net Operating Profit After Taxes - (Operating Capital × Weighted Average Cost of Capital)
= $2,925,000 - (15,000,000 × 9%)
= $2,925,000 - $1,350,000
= $1,575,000
