Compute holts eva

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The Holt Company uses EVA to evaluate top management performance. In 2018, Holt had net operating income of $8,210 million, income taxes of $1,395 million, and average noncurrent liabilities plus stockholder equity of $27,555 million. The company's capital is about 55% long-term debt and 45% equity. Assume that the after-tax cost of debt is 10% and the cost of equity is 12%.

Question 1: Compute Holt's EVA. Assume definitions of after-tax operating income and invested capital as reported in Holt's annual reports without adjustments advocated by Stem Stewart.

Question 2: Explain what EVA tells you about the performance of the top management of Holt in 2018.

Reference no: EM132517033

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