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scoray [572]
3 years ago
5

Washington Company has two divisions: the Adams Division and the Jefferson Division. The following information pertains to last

year's results: Adams Division Jefferson Division Net (after-tax) income $ 605,000 $ 315,000 Total capital employed 4,000,000 3,250,000 Washington's actual cost of capital was 12%.
Required: 1. Calculate the EVA for the Adams Division. If required, enter a negative EVA as a negative number by entering your answer with the minus sign. 605,000 315,000 4,000,000 3,250,000 2. Calculate the EVA for the Jefferson Division. If required, enter a negative EVA as a negative number by entering your answer with the minus sign.
Business
1 answer:
Gwar [14]3 years ago
4 0

Answer:

$125,000 and -$75,000

Explanation:

The computation of the economic value added is shown below:

As we know that

Economic Value Added is

= Net (after-tax) income - (Capital employed × Actual cost of capital)

For Adams Division, it is

= $605,000 - ($4,000,000 × 12%)

= $605,000 - $480,000

= $125,000

And for Jefferson Division, it is

= $315,000 - ($3,250,000 × 12%)

= $315,000 - $390,000

= -$75,000

We simply applied the above formulas

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Answer:

The present yearly net operating income or loss is  - $90,000

Explanation:

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Than, Contribution - fixed cost = net income

where,

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Variable cost = Present volume × Variable cost per unit

                     = 15,000 × $40

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<h3>Two ways in which can adapt to the challenges of the business environment</h3>
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<h3>1. Recognize the Size of the Change</h3>
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<h3>2. Be open to new and different ideas.</h3>
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Stells [14]

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