Compute the economic value for each office worldwide

Assignment Help Finance Basics
Reference no: EM13907319

Sevilla Consulting offers environmental consulting services worldwide. The managers of branch offices are rewarded for superior performance with bonuses based on the economic value that the office adds to the company. Last year's operating results for the results for the entire company and for its three officers, expressed in millions of U.S. dollars as are follows:

Worldwide Europe Americas Asia
Cost of Capital 9% 10% 8% 12%
Total Assets $210 $70 $70 $70
Current Liabilities $80 $10 $40 $30
After-tax operating income $15 $5 $5 $5

1. Compute the economic value for each office worldwide. What factors affect each office's economic value added? How can an office improve its economic value added?

2. If manager's bonuses are based on economic value added to office performance, what specific action will managers be movitated to take?

3. Is economic value added the only performance measure needed to evaluate investment centers adequately? Explain your response.
6 and 287.

Reference no: EM13907319

Questions Cloud

Target weights of debt-preferred and common equity : A company has target weights of debt, preferred and common equity of 20%, 10% and 70%, respectively. It has liquidation values of debt, preferred and common equity of 30%, 15% and 55%. Its book values of debt, preferred and common equity are 40%, 10%..
Sufficient funds to pay cash for entire expansion project : Winston Enterprises would like to buy some additional land and build a new factory. The anticipated total cost is $169.47 million. The owner of the firm is quite conservative and will only do this when the company has sufficient funds to pay cash for..
How much does he need to borrow to purchase the house : Mr. Bill S. Preston, Esq. purchased a new house for $90,000. He paid $30,000 upfront and agreed to pay the rest over the next 20 years in 20 equal annual payments that include principal payments plus 11 percent compound interest on the unpaid balance..
The company plans to open a third department in january : Bonanza Entertainment began operations in January 2013 with two operating (selling) departments and one service (office) department. Its departmental income statements follow.
Compute the economic value for each office worldwide : Compute the economic value for each office worldwide. What factors affect each office's economic value added? How can an office improve its economic value added?
Why does longer-term bond fluctuate more when interest rates : (Bond Valuation) Crawford Inc. has two bond issues outstanding, both paying the same annual interest of $85, called Series A and Series B. Series A has a maturity of 12 years, whereas Series B has a maturity of 1 year. Why does the longer-term (12-ye..
Perform ticket bookings for various flights : The development team of SoftSols Inc. analyzes the source code of the existing software and notes the following observations: The software contains a private class, named bookTickets, that contains the methods used to perform ticket bookings for va..
The current cash flows as a dividend to its shareholders : The firm you are CEO if has a current period cash flow of 1.75 million and pays no dividend. The present value of the company’s future cash flows is $25.0 million. Suppose you and the board announce a plan to pay out 40 percent of the current cash fl..
Implementation of the recursive algorithm : Develop an iterative method having the same functionality as the recursive nextPermutation method - Create a class SortingFunctions.

Reviews

Write a Review

Finance Basics Questions & Answers

  Financial reporting and analysis

Finance is about Gunns Ltd, a company in dealing with forestry products in Australia. The company has also been listed in Australian Stock Exchange. As many companies producing forestry products, even Gunns Ltd is facing various problems. Due to the ..

  A report on financial accounting

This report is specific for a core understanding for Financial Accounting and its relevant factors.

  Describe the types of financial ratios

Describe the types of financial ratios and other financial performance measures that are used during venture's successful life cycle.

  Differences between sole proprietorship and corporation

Briefly describe the major differences between a sole proprietorship and a corporation

  Prepare a cash budget statement

Calculate the expected value of the apartment in 20 years' time. What is the mortgage loan repayment at the beginning of each month

  What are the implied interest rates

What are the implied interest rates in Europe and the U.S.?

  State pricing theory and no-arbitrage pricing theory

State pricing theory and no-arbitrage pricing theory

  Small business administration

Identify the likely stage for each venture and describe the type of financing each venture is likely to be seeking and identify potential sources for that financing.

  Effect of financial leverage

The Effect of Financial Leverage and working capital management

  Evaluate the basis for the payment to the lender

Evaluate the basis for the payment to the lender and basis for the payment to the company-counterparty.

  Importance of opps, ipps, mpfs and dmepos

Research and discuss the differences and importance of : OPPS, IPPS, MPFS and DMEPOS.

  Time value of money

Time Value of Money project

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd