I've been having a lot of issues with the unwritten assumptions in the Becker practice problems. With all of the word questions in BEC, having to figure out the assumptions and rerun the computation after learning that the answer I got wasn't one of the options requires even more time I don't have. For example:
Zig Corp. provides the following information:
Pretax operation profit $300,000,000
Tax rate 40%
Capital used to generate profits (50% debt, 50% equity) 1,200,000,000
Cost of equity 15%
Cost of debt 5%
Which of the following represents Zig's year-end economic value-added amount?
a. $180,000,000
b. $120,000,000
c. $0
d. $60,000,000
My initial answer was $72,000,000 because it doesn't say that the cost of debt is after-tax, but apparently I was supposed to assume that? This problem was pretty easy/quick to rerun, but on some of the problems it really takes a chunk out of your time. For those of you who have taken BEC, are the actual exam questions worded better and/or do you have any tricks for figuring out the assumptions in the problem?