Unformatted text preview: Investors did not get the return they require. Note: high growth usually causes negative FCF (due to investment in capital), but thats OK if ROIC &gt; WACC. For example, home depot has high growth, negative FCF, but a high ROIC. g. Jamison also has asked you to estimate Computron's EVA. She estimates that the after-tax cost of capital was 10 percent in both years. ANSWER: EVA = NOPAT- (WACC)(CAPITAL). EVA 07 = $10,464 - (0.1)($2,257,632) = $10,464 - $225,763 = -$215,299. EVA 06 = $125,460 - (0.10)($1,138,600) = $125,460 - $113,860 = $11,600....
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- Spring '08
- Finance, Computron, negative FCF