Calculating EVA Erewster Company manufactures elderberry wine. Last year, Brewster eamed operating income of 186.000 after income taxes, Captal employed quand $2.1 milion Brewiter is 45 percent equity and 55 percent 10-year bonds paying 7 percent interest Brewster's marginal tax rate is 40 percent. The company is considered a fality maky vestment and probaby commands a 12 point premium above the 4 percentrate on inng-term Treasury bonds Jonathan Brewsters aunts, Alby and Martha, have just retired and Brewster is the new CEO of drewster Company. He would hike to improve EVA for the company. Compute EVA under each of the following independent scenaries that Brewster is considering Required: Use a spreadsheet to perform your calculations and round all interim and percentage figures to four decimal places. If the EVA is negative, enter your answer as a negative amount 1. No changes are made, calculate CVA using the original data 5 -11,710 2. Suger will be used to replace another natural ingredient (atomic number 33) in the elderberry wine. This should not affect costs but will begin to affect the market assessment of Brewster Company, bringing the premium above long term Treasury bil to 10 percent the first year and 7 percent the second year. Calculate revised EVA for both years EVA Year 15 Year 2 3. Brewster is considering expanding but not additional capital. The company could borrow money, but it is considering sering more common stock, which would increase quity to 70 percent of total financing. Tocal capital employed would be $3,800,000. The new after-tax cporating income we be $365,000. Using the original data acute EVA. Then, recalculat EVA assuring the materials substitution described in Requirement 2. New attor tax income will be $385,000, and in Year 1, the premium will be 10 percent above the lang-tarm Trentury rate. In Year at will be 7 percent above the long-term Tresory rate it You will calculate three EVAs for this requirement) I EVA Year 1 $ $ Year 1 (10% premium Year 27% premium 5