Economic Value Added
Suwon Pharmaceuticals invests heavily in research and development (R&D), although it must currently treat its R&D expenditures as expenses for financial accounting purposes. To encourage investment in R&D, Suwon evaluates its division managers using EVA. The company adjusts accounting income for R&D expenditures by assuming these expenditures create assets with a two year life. That is, the R&D expenditures are capitalized and then amortized over two years.
BK division of Suwon shows after-tax income of $2.5 million for year 2. R&D expenditures in year 1 amounted to $1 million and in year 2, R&D expenditures were $1.6 million. For purposes of computing EVA, Suwon assumes all R&D expenditures are made at the beginning of the year. Before adjusting for R&D, BK division shows assets of $10 million at the beginning of year 2 and current liabilities of $200,000. Suwon computes EVA using divisional investment at the beginning of the year and a 12 percent cost of capital.
Compute EVA for BK division for year 2.
Determine the maximum allowable spacing of nominal 2 X 4-in (50 X 100-mm) studs for a wall form sheathed with nominal I-in. (25-mm) lumber. Assume that the sheathing is c...Jul 22 2020
William Beville’s computer training school, in Richmond, stocks workbooks with the following characteristics:a) Calculate the EOQ for the workbooks.b) What are the annual...Jul 29 2020
You are considering purchasing a lot adjacent to your laundry business to provide adequate parking space for your customers. You need to borrow $50,000 to secure the lot....Apr 29 2020
Should military spending be subject to macroeconomic constraints? What programs should be expanded or contracted to bring about needed changes in the budget?Mar 29 2020
4.* Abbott Manufacturing produces plastic cases for solar photovoltaic panels and has decided to combine orders from customers to increase work order size, and thereby ma...Aug 06 2020
Transistors belong to ______ generation of the computer evolution. (a) First (b) Second (c) Third (...Jan 11 2018
You bought a bond 6 years ago for $3,500. It has a $4.000 face value and a nominal annual 10% bond rate, paid quarterly (so it pays 2.5% of the face value each quarter). ...Feb 07 2020
Points P,Q and R have position vectors 2j, 4i and 2i-2j respectively in the x-y plane. (a) Find 2OP + 3OQ – 4OR (b) Determine (i) PQ and PR (ii) PQ.PR (iii) Angle QPRAug 08 2020
Underestimated Inc.âs common shares currently sell for $36 each. The firmâs management believes that its shares should really sell for $42 each. The firm just paid an...Aug 20 2020
A car of mass 2100 kg travels on a banked curved whose radius is 800 m Find the maximum safe speed if the coefficient of friction between the tires and the road is 088 an...Mar 19 2020
Welcome to MyCourseHelp Services, World's leading Academic solutions provider with Millions of Happy Students.