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Evaluating investment centers with residual income

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Question - Evaluating Investment Centers with Residual Income

Lakeside Hospital is a division of Superior Healthcare organized as an investment center. In the past year, the hospital reported an after-tax income of $2,290,000. Total Interest expense was $1,970,000 and the hospital's tax rate was 36 percent. Hospital assets totaled $33,300,000 and noninterest-bearing current liabilities were $9,410,000. Superior has established a required rate of return equal to 18 percent of invested capital.

Calculate the residual income/EVA of Lakeside Hospital.

Reference no: EM131790389

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