Estimate the Economic Value Added (EVA) for your company over the last 3 years, and do the same…

A. Estimate the Economic Value Added (EVA) for your company over the last 3 years, and do the same for at least one of the competitors. Note: While this is not entirely accurate, feel free to assume that the WACC did not change in the last 3 years to simplify the calculations (that is, use the current WACC for these calculations). You still need the historical balance sheet and income statements to compute EVA. B. Discuss the implications of your results in the last question. C . Describe your company’s capital structure over the last 3 years. 2) Describe your competitor(s)’ capital structure over the last 3 years. 3) Compare the capital structures of your company’s and your competitor(s)’. Note: You should analyze mostly leverage ratios in this question (you may already have done some of this analysis for ACR 1). Remember to use the market value of equity to calculate leverage ratios. I would focus mostly on the leverage ratio defined as total debt / (total debt + market value of equity). For this question, you will need historical data on the market value of equity for your companies. The video describing the assignment gives some guidelines on how to do this. D. Is the amount of debt that your company has compatible with the trade-off theory of capital structure? 2) Explain why or why not. In your explanation, a) consider the median leverage ratio of 30% that we discussed in the lecture, and also the specific characteristics of your company and competitors; and b) think about risk, profitability, collateral, the benefits of reducing taxes using interest tax shields, and growth opportunities.


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