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All-Canadian, Ltd., is a multiproduct company with three divisions: Pacific Division, Plains Division, and Atlantic Division. The company has two sources of long-term capital: debt
All-Canadian, Ltd., is a multiproduct company with three divisions: Pacific Division, Plains Division, and Atlantic Division. The company has two sources of long-term capital: debt and equity. The interest rate on All-Canadian's $415 million debt is 9 percent, and the company's combined federal and state income tax rates amount to 30 percent. The cost of All- Canadian's equity capital is 12 percent. Moreover, the market value of the company's equity is $535 million. (The book value of All-Canadian's equity is $437 million, but that amount does not reflect the current value of the company's assets or the value of intangible assets.) The following data (in millions) pertain to All-Canadian's three divisions. Before-Tax Operating Division Income Current Liabilities Pacific $17 $7 Total Assets $ 63 Plains Atlantic 46 6 313 49 10 493 2. Compute the economic value added (or EVA) for each of the company's three divisions. (Negative amounts should be indicated by a minus sign. Do not round intermediate calculations. Enter your final answers in dollars and not millions.) Division Pacific Economic Value Added Plains Atlantic
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