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HAV Co June 13
The premium payable on acquisition should be based on the present value to infinity of the after tax excess earnings the company has generated in the past three years over the average return on capital employed.I calculated EVA=average net operating profit after tax – return on capital employedxaverage capital employed, then discounted it.
Within the answer it calculated by using earnings before tax, after calculating EVA, then it applies the taxation.
Which one is correct?
I think my calculations are more correct.Dear John,
Don’t waste time answering this question. I understand the reason. The return on capital employed is given pre-tax.)))
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