1. Purple Corporation has an average cost of capital of 22%. It bought an investment property that would require a cost to dispose of P450,000. Which of the following statements is FALSE? *
answer not given
The cost of illiquidity is P8,434 if Purple plans to sell it 20 years from acquisition.
If Purple is deciding to sell the asset on the fifth or tenth year, the difference in cost of illiquidity is P104,895.
There will be no cost of illiquidity if it plans to never sell the asset.
The cost of illiquidity is P368,853 if it plans to sell the asset one year from acquisition.
2. Violet Corporation has P500,000 current liabilities, P2,500,000 noncurrent liabilities and P5,000,000 equity. It has a weighted average cost of capital of 18% and annual earnings of P1,500,000 for the first five years and P2,000,000 for the last 5 years. How much is the value of the firm using economic value added? *
P8,953,102.81
P8,857,570.58
P9,938,846.03
P10,001,736.82