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Washington Company has two divisions: the Adams Division and the Jefferson Division The following information pertains to last year’s results Washington’s actual cost of capital was 12 percent

Washington Company has two divisions: the Adams Division and the Jefferson Division. The following information pertains to last year’s results:

Washington’s actual cost of capital was 12 percent.

Economic Value Added Refer to the information for Washington Company above.

Required:

1. Calculate the EVA for the Adams Division.

2. Calculate the EVA for the Jefferson Division.

3. Conceptual Connection: Is each division creating or destroying wealth?

4. Conceptual Connection: Describe generally the types of actions that Washington’s management team could take to increase Jefferson Division’s EVA?

 

Jun 27 2020 View more View Less

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