You decide to start an Equipment Rental Company. You spend $…

You decide to start an Equipment Rental Company. You spend $1,000,000 on equipment. You finance the equipment with $800,000 of debt, and $200,000 of equity. There is no excess cash on the balance sheet.   At the end of your first year, you post NOPAT of $280,000 – without any deduction for your salary.  If you worked for someone else you could expect to earn $120,000.   Your cost of equity is 16%, your WACC is 14%.  What is your EVA?

It is important to understand the industry structure and the…

It is important to understand the industry structure and the economic forces behind each industry. Equally important is the need to understand where the industry is in its lifecycle, and what effect moving through the lifecycle stages has on industry dynamics. One inevitable change is the movement from growth phase to the mature phase. What would you expect to happen during that movement to gross margins and why?