Calculate eva for both subsidiaries note that since no

Reference no: EM13482181

ELN Waste Management has a subsidiary that disposes of hazardous waste and a subsidiary that collects and disposes of residential garbage. information related to the two subsidiaries follows:

Hazardous Waste Residential Waste
Total assets $15,300,000 $87,000,000
Noninterest- bearing current liabilities 3,300,000 13,200,000
Net income 1,870,000 6,600,000
Interest expense 1,375,000 8,030,000
Required rate of return 10% 13%
Tax rate 40% 40%

Required

a. Calculate ROI for both subsidiaries.

b. Calculate EVA for both subsidiaries. Note that since no adjustments for accounting distortions are being made, EVA is equivalent to residual income.

c. Which subsidiary has added the most to shareholder value in the last year?

d. Based on the limited information, which subsidiary is the best candidate for expansion? Explain.

Reference no: EM13482181

Questions Cloud

Based on historical data from other franchise stores and a : steven farrow is considering opening a franchise liquor store next to a new retail shopping center based on historical

Plummet corporation reported the book value of its net : plummet corporation reported the book value of its net assets at 400000 when zenith corporation acquired 100 percent

The following financial data of tim corporation is : the following financial data of tim corporation is available for the year 2013. compute the sales revenue to be

Evaluate charlottes proposal do you support use of a : the city of medina park operates a plumbing and electrical maintenance department responsible for maintaining all water

Calculate eva for both subsidiaries note that since no : eln waste management has a subsidiary that disposes of hazardous waste and a subsidiary that collects and disposes of

B-mart sells 5000 of blue jeans the customer later tells : b-mart sells 5000 of blue jeans. the customer later tells b-mart that 200 of them are defective. the sale of the 5000

What are some ways that companies dispose of assets what : what are some ways that companies dispose of assets? what are some reasons that companies dispose

Yanmei construction company began operations january 1 2010 : yanmei construction company began operations january 1 2010. during the year yanmei construction entered into a

Warren ltd has two production departments building a and : warren ltd. has two production departments building a and building b and two service departments maintenance and

User Account

All Pages