alleryStart learning →A division earns NOPAT of Rs 90 lakh on capital of Rs 600 lakh at 10% WACC. EVA?
- Rs 15 lakh
- Rs 30 lakh
- Rs 60 lakh
- Rs 90 lakh
Show answer and solution
Correct answer: B. Rs 30 lakh
Capital charge is 600 x 10% = 60, so EVA = 90 - 60 = Rs 30 lakh.
CA Final Divisional Transfer Pricing — practice questions — page 2
Explore 41 free Divisional Transfer Pricing questions in CA Final Cost and Management Accounting. Open each question or exercise to read its content, reference answers and available explanation.
Practise Divisional Transfer Pricing with Quill →Divisional Transfer Pricing questions and exercises with answers
Showing questions 31–41 of 41.
A division earns NOPAT of Rs 90 lakh on capital of Rs 600 lakh at 10% WACC. EVA?Read the answer and worked solution →Return on capital is 14%, cost of capital 11%, capital Rs 500 lakh. What is EVA?Read the answer and worked solution →What does the capital charge in EVA represent?Read the answer and worked solution →When is value created, according to the EVA idea?Read the answer and worked solution →NOPAT of Rs 72 lakh on capital of Rs 400 lakh gives RONA of what?Read the answer and worked solution →RONA is 16%, required return 12% and net investment Rs 800 lakh. EVA?Read the answer and worked solution →The cost of capital is best described as what?Read the answer and worked solution →A division earns Rs 36 lakh profit on Rs 240 lakh invested. Its ROI is what?Read the answer and worked solution →A known weakness of ROI as a measure is that it is not what?Read the answer and worked solution →Why can ROI figures be manipulated?Read the answer and worked solution →Group units in tax rates of 25% and 40%. Shifting Rs 10 lakh profit to the lower-tax unit saves how much?Read the answer and worked solution →
Worked practice questions
Return on capital is 14%, cost of capital 11%, capital Rs 500 lakh. What is EVA?
- Rs 15 lakh
- Rs 55 lakh
- Rs 70 lakh
- Rs 125 lakh
Show answer and solution
Correct answer: A. Rs 15 lakh
Spread is 3% and 3% of 500 lakh is Rs 15 lakh.
What does the capital charge in EVA represent?
- Return investors need
- Annual depreciation
- Interest actually paid
- Tax payable now
Show answer and solution
Correct answer: A. Return investors need
It is the return required to compensate investors for the risk of the capital invested.
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