B is corrent. The formula for EVA is net operating profit after taxes minus cost of invested capital. EVA would be computed as follows:
Net operating income after
taxes
$36,000,000
– Capital charge on invested
capital ($100,000,000 × 10%)
(10,000,000)
= Economic value added
$26,000,000
A is incorrect because EVA is net operating profit after taxes minus cost of invested capital. C is incorrect because EVA is net operating profit after taxes minus cost of invested capital. D is incorrect because EVA is net operating profit after taxes minus cost of invested capital.
