Calculate the eva for the jefferson division

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Reference no: EM13939660

ECONOMIC VALUE ADDED

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
Average operating assets	4,000,000	3,250,000

Washington's actual cost of capital was 12 percent.

Required:

1. Calculate the EVA for the Adams Division.

2. Calculate the EVA for the Jefferson Division.

3. Is each division creating or destroying wealth?

Reference no: EM13939660

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