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Economic Value Added Washington Company has two divisions: the Adams Division and the Jefferson Division. The following information pertains to last year's results: Adams Division
Economic Value Added Washington Company has two divisions: the Adams Division and the Jefferson Division. The following information pertains to last year's results: Adams Division Jefferson Division Net (after-tax) income $321,300 $617,100 4,600,000 Total capital employed 3,867,500 Washington's actual cost of capital was 13%. Required: 1. Calculate the EVA for the Adams Division. If required, enter a negative EVA as a negative number by entering your answer with the minus sign. 2. Calculate the EVA for the Jefferson Division. If required, enter a negative EVA as a negative number by entering your answer with the minus sign. 3. Conceptual Connection: Is each division creating or destroying wealth? Adams Division Creating wealth Jefferson Division Destroying wealth
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