Leesum Company has two divisions: the Leone Division and the Letwo Division. The following information pertains to
Question:
Leesum Company has two divisions: the Leone Division and the Letwo Division. The following information pertains to last year’s results:
Leesum’s actual cost of capital was 12%.
Required:
1. Calculate the EVA for the Leone Division.
2. Calculate the EVA for the Letwo Division.
3. Is each division creating or destroying wealth?
4. Describe generally the types of actions that Leesum’s management team could take to increase Letwo Division’s EVA? Explain how Leesum’s management can use data analysis to decide which action(s) to take.
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Step by Step Answer:
1 Leone Division EVA 550000 012 3800000 94000 2 Letwo Division EVA 314000 012 3100000 58000 3 The Le...View the full answer
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Related Book For 
Managerial Accounting The Cornerstone Of Business Decision Making
ISBN: 9780357715345
8th Edition
Authors: Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
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