Unformatted text preview: ability to its debt obligations out of current earnings (long-term debt-paying ability). For example, EBIT = NI, minus any gains, + Tax +Interest. 4. EVA [EBIT x (1-T)] – [WACC x (TA – CL)] OR [EBIT x (1-T)] – (Cost of Equity x TE) – [Cost of Debt x (1-T) x TL] 5. The Economic Rate of Return on Common Stock is calculated by (1) adding the dividends received over the period of ownership to the change in the stock price during the period of ownership and (2) dividing this amount by the original price paid for the stock. (Dividends + change in price) divided by beginning price...
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This note was uploaded on 02/01/2009 for the course ACTG 6610 taught by Professor Ward during the Spring '09 term at Middle Tennessee State University.
- Spring '09