Calculating EVA

rate is $40$ percent. The company is considered a fairly risky investment and probably commands a $12-$point premium above the $5$ percent rate on long$-$term Treasury bonds.

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.

No changes are made; calculate EVA using the original data.

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and $7$ percent the second year. Calculate revised EVA for both years.

rate. In Year $2,$ it will be $7$ percent above the long$-$term Treasury rate. $($Hint: You will calculate three EVAs for this requirement.$)$